Wall Street Rallies as Tariff Truce Sparks Bullish Momentum Across U.S. Equities

Tariff Relief Lifts U.S. Stocks to Multi-Month Highs

Wall Street experienced a powerful rally on Monday, May 12, 2025, after a temporary 90-day U.S.-China tariff reduction agreement triggered a wave of bullish sentiment across equity markets. The S&P 500 closed up 184.28 points (+3.3%) at 5,844.19, its best one-day performance in months. The Dow Jones Industrial Average surged 1,160 points (+2.8%), and the Nasdaq leapt by 4.3%, marking a sharp reversal in recent market caution.

Under the new agreement, the U.S. will lower tariffs on Chinese imports from 145% to 30%, while China reduces its duties on American goods from 125% to 10%. Though temporary and set to expire on August 10, the move offered immediate relief to multinational firms and consumers alike, fueling optimism that broader trade negotiations could resume in earnest.

Retail, technology, and travel sectors saw outsized gains as companies cheered the drop in cross-border costs. Moreover, the S&P 500 closed above its 200-day moving average for the first time in over 30 sessions—a technical milestone that historically signals stronger momentum ahead. According to MarketWatch, similar breakouts have preceded extended rallies in previous bull cycles.

What Traders Should Watch in the Next Session

Looking ahead to the next trading session, several key factors could shape market direction. First, investor focus will likely remain on geopolitical developments, particularly whether the U.S. and China use this 90-day window to craft a more durable trade deal. While the tariff cuts offer a reprieve, remaining levies still burden supply chains and consumer prices, and a failure to reach a permanent agreement could lead to renewed volatility.

Additionally, economic data releases—including April retail sales figures and producer price index updates—may provide fresh clues about inflation and consumer resilience. With markets highly sensitive to Federal Reserve policy expectations, any signs of price pressure could weigh on the rally’s durability.

Earnings season is also nearing a close, but guidance from retail giants and industrials could influence sector rotation, especially after such a strong move in consumer-facing stocks.

As AP News notes, the tariff détente has temporarily reshaped sentiment, but institutional investors remain cautious about long-term exposure amid political and economic uncertainty.

Conclusion

The explosive gains seen in Monday’s session underscore just how sensitive markets remain to trade policy shifts. With technical momentum strengthening and short-term relief in play, bulls may have room to run—provided no negative surprises surface. However, the road to sustained upside likely depends on broader progress in U.S.-China negotiations and economic resilience in the months ahead