The ceasefire between the United States and China has set off a celebration on Wall Street.
The Nasdaq and the S&P 500 climbed more than 0.5% apiece.
« A truce is definitely better than an escalation of hostilities, » Kit Juckes, strategist at Societe Generale, wrote to clients on Monday.
Juckes said that even though investors may doubt the substance of the US-China agreement, « this morning’s response reflects relief and a desire to pick up some last-ditch bargains. »
Not surprisingly, investors piled back into companies that rely on China for a significant chunk of their sales. That includes tech giants like Apple ( AAPL), Nvidia ( NVDA) and Qualcomm ( QCOM) as well as industrial companies like Boeing ( BA), Caterpillar ( CAT) and Deere ( DE). Tiffany ( TIF) jumped 4%, while Wynn Resorts ( WYNN) surged 9%.
« The market is thrilled to get a little bit of a reprieve, » said Amanda Agati, co-chief investment strategist at PNC. « But it’s early to say anything is done and to cross this worry off the list. There’s still a long road ahead.
The relief rally comes after the S&P 500 spiked nearly 5% last week, its best since December 2011. That rebound was triggered by hopes of progress on the trade front and a speech by Federal Reserve chief Jerome Powell that investors interpreted as a signal the central bank will not rush to raise interest rates.
