Nike (NKE) shares surged 7.89% in pre-market trading on Monday, as investors cheered a significant breakthrough in US-China trade negotiations. The sportswear giant's stock movement is part of a broader rally in retail stocks, fueled by the announcement of reduced tariffs between the world's two largest economies.

The weekend trade talks between the United States and China resulted in an agreement to substantially lower tariffs on each other's goods. China will reduce its tariffs on US products to 10% from a previous high of 125%, while the US will cut its restrictions to 30% from 145%. This 90-day tariff reduction is expected to provide significant relief to retail companies like Nike, which have been grappling with increased costs and supply chain disruptions due to the prolonged trade tensions.

Nike's pre-market rally outpaced other major players in the retail sector, which also saw significant gains. Amazon was up 8%, Under Armour rose 7%, and Target increased by 5%. This positive sentiment in the retail sector underscores investors' optimism about the potential benefits of eased trade tensions, particularly for companies with significant exposure to Chinese manufacturing or the Chinese consumer market. As Nike continues to expand its global footprint, the improved trade relations between the US and China could potentially lead to reduced costs and increased market access, further supporting its growth prospects.