Stocks Continue Historic Climb Amid Tariff Deals
Stock markets are rising quickly thanks to a recent trade deal, but could its effects be temporary and the trade war be back on soon?
Quick overview
- The U.S. and China reached a temporary agreement to cut tariffs, leading to a significant rise in stock markets on Monday.
- The Nasdaq Composite gained 4.35%, the Dow Jones increased by 2.81%, and the S&P 500 rose by 3.26%, marking one of their best trading days in 2025.
- Despite the positive momentum, the temporary nature of the trade agreement raises concerns about potential future market volatility.
- Investors are advised to be cautious about investing heavily in stocks, as high inflation and the absence of Fed interest rate cuts could still pose risks.
The U.S. and China made a temporary agreement to cut tariff taxes for one another, causing the stock market to shoot up Monday, and the market continued to rise throughout the day.
As stock markets open for Tuesday, it is expected that the market indices will keep on climbing, but perhaps not as dramatically as they did Monday. At the end of trading from Monday, the Nasdaq Composite had gained 4.35% while the Dow Jones added 2.81%. The S&P 500 also gained, with an additional 3.26%, and these three indices marked one of their best days for trading in 2025.
This could stave off any previously impending recession or stock market crash, but investors need to know that there are still factors that could put their investments at serious risk.
Stock Markets Could Still Plummet
What might cause the market to crumble even after its sky high gains? The most alarming fact is that the agreement between China and the United States is only a temporary one. If egos flare and offence is taken, the two countries could be fighting again over tariffs.
There has been a temporary reprieve from President Donald Trump as he paused some of the most severe tariffs for 90 days, and when that period is up, the trade war could commence anew. There is also a tentative deal between the United States and the United Kingdom. This has the potential to fall through as well, especially since Trump has proven to be a volatile leader capable of turning about quickly when it suits him.
The S&P 500 finished on Monday above its 200-day moving average, which is great news for the stock markets, but that does not mean that there is no chance it will not all come falling down in the near future. There are still no Fed interest rate cuts happening for now, and inflation is still high, which can put pressure on the market and hold it back from its potential.
Right now, it looks like the market is enjoying a reprieve, but that may not be the case for a lot longer. Investors should be wary about sinking too much money into stocks at the moment, but they should also be careful not to miss out on the record highs that are likely to be achieved over the next few days.
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