U.S. Stocks Rise on Trade Deal Hopes
U.S. stocks gained ground on Monday morning, buoyed by President Trump’s comments suggesting a trade agreement with China could be reached this week, which may lift export restrictions on essential minerals.
The Dow Jones Industrial Average rose by 302 points, about 0.6%, around 9:30 a.m. ET, while both the S&P 500 and Nasdaq saw increases of 0.9% and 1.4%, respectively.
On Air Force One, President Trump expressed confidence, stating, “I have a lot of respect for President Xi, and we’re going to get a deal done,” during a conversation with reporters.
Treasury Secretary Scott Bessent indicated over the weekend that the forthcoming deal could eliminate 100% tariffs that were threatened by President Trump. It may also postpone Beijing’s stringent export controls on rare earth materials, which play a crucial role in energy infrastructure and defense technology.
A significant meeting is set for Thursday, where President Trump will sit down with Chinese leader Xi Jinping for these important trade discussions.
Technology shares, particularly those reliant on Chinese supply chains, experienced a notable uptick. Nvidia stock climbed by 2.2%, and shares of Broadcom and AMD increased by 2.2% and 0.8%, respectively. Additionally, Tesla saw a rise of 2.4%, while Apple increased by 1.2%.
Investors are hopeful that a trade agreement might also lead China to resume purchasing U.S. soybeans. American farmers have been losing market share to competitors like Brazil and Argentina due to the tariffs imposed by President Trump.
In addition, President Trump appears to be considering a deal involving TikTok that would transfer ownership of its American version to U.S. entities.
The anticipated stock rally is also fueled by expectations that the Federal Reserve will announce an interest rate cut this Wednesday, particularly after last week’s consumer inflation figures came in lower than anticipated.
However, the ongoing government shutdown, which has now reached its 27th day, casts a shadow over economic optimism, with no resolution in sight.
Rising trade tensions with Canada, specifically regarding a new 10% tariff, added complexity to the market atmosphere. President Trump criticized Canada for this move, referencing an old audio clip of President Reagan from 1987 that condemned such tariffs.
On a different note, shares of U.S.-listed rare earth miners took a hit as investors anticipated a possible recovery in China’s supply, which might lessen the demand for U.S. miners.
Stocks such as Critical Minerals, US Rare Earths, MP Materials, and Trilogy Metals dropped significantly, with decreases of 18.7%, 13.9%, 6.5%, and 14.5%, respectively. Furthermore, Energy Fuels and NioCorp Developments fell by 10.9% and 14.2%, respectively.
