Stock Market Update

[BRIEFING.COM] The stock market closed sharply higher across the board. The Dow Jones Industrial Average was more than 1,100 points higher than Friday's close. The S&P 500 jumped 3.3% and the Nasdaq Composite closed 4.4% higher.

Market participants were enthused by a notable easing in the trade war with China. Both the U.S. and China agreed to a 90-day reduction in tariffs, effective Wednesday, with the U.S. dropping tariffs on China from 145% to 30% and China dropping tariffs on the U.S. from 125% to 10%.

The good news for the market is that the reductions were larger than expected. The less than good news for the market is that the reductions expire in 90 days if both sides can't reach a more permanent trade deal. 

The market was focused on the positive takeaway for today, fueling an everything-rally. Moves were helped by short-covering activity and a fear of missing out on further gains. 

Outsized moves in the mega cap space also played a big role in the performance of major equity indices. Apple (AAPL 210.79, +12.52, +6.3%) was a standout in that respect, surging 6%.

Apple, along with other mega caps and chipmakers, helped propel the S&P 500 technology sector to close 4.7% higher. The consumer discretionary (+5.7%) and communication services (+3.4%) sectors, which also house mega cap constituents, were among the top performers.

The risk-on bias in the market left the defensive-oriented utilities sector (-0.7%) alone in the red by the close. 

The risk-on skew also resulted in the selling of Treasuries, the gain in the U.S. Dollar Index (+1.6% to 101.90), a drop in gold prices ($3,228.90, -15.80, -3.5%), and the sharp decline in the CBOE Volatility Index (-16.3%, or 3.55, to 18.35).

The 10-yr yield settled eight basis points higher at 4.46% and the 2-yr yield settled 12 basis points higher at 4.00%.

• Dow Jones Industrial Average: -0.3% YTD
• S&P 500: -0.6% YTD
• S&P Midcap 400: -2.3% YTD
• Nasdaq Composite: -3.1% YTD
• Russell 2000: -6.2% YTD

Reviewing today's economic data:

• The Treasury Budget for April showed a surplus of $258.4 billion compared to a surplus of $209.5 billion in the same period a year ago. The April deficit resulted from receipts ($850.1 billion) exceeding outlays ($591.8 billion). The Treasury Budget data are not seasonally adjusted so the April surplus cannot be compared to the March deficit of $160.5 billion.
  • The key takeaway from the report is that there was some relief on the deficit side of things with tax receipts swelling in April; however, the budget deficit at this point in the fiscal year is still 22% greater than in fiscal 2024.

Looking ahead to Tuesday, market participants receive the following economic data:

• 6:00 ET: April NFIB Small Business Optimism Index (prior 97.4)
• 8:30 ET: April CPI (Briefing.com consensus 0.3%; prior -0.1%) and Core CPI (Briefing.com consensus 0.3%; prior 0.1%)