The S&P 500 futures are up 163 points, Nasdaq 100 futures have gained 774 points, and Dow Jones Industrial Average futures are up 999 points. This suggests a strong start for the stock market, driven by a significant development in the trade discussions with China. The U.S. has decided to lower tariffs on Chinese goods to 30% from 145% for 90 days, while China will reduce its retaliatory tariffs on U.S. products to 10% from 125% for the same period.
President Trump is set to sign an executive order to implement a "most favored nation" pricing model for prescription drugs, ensuring that the U.S. pays the same as the lowest price available globally.
In early trading, there's a risk-on mood, with large-cap tech stocks leading the premarket gains. Treasury yields are also seeing movement, with the 10-year yield rising to 4.44%, and the 2-year yield increasing to 3.98%.
In stock news:
In a significant breakthrough, the U.S. and China have agreed to reduce tariffs on each other's goods for a 90-day trial period, a move that has generated widespread optimism across global markets. The U.S. will cut tariffs on Chinese imports from 145% to 30%, while China will lower tariffs on U.S. goods from 125% to 10%. This development is expected to benefit sectors such as shipping, semiconductors, and logistics, with stocks in these industries showing positive premarket movements.
Wedbush Securities highlighted the tariff reductions as a "dream scenario" for tech stocks, suggesting that the agreement could propel tech stocks to new highs this year. Companies like Nvidia (NVDA, Financial) have faced challenges due to chip restrictions, but the easing of tariffs is seen as a bullish signal for the tech sector.
Alphabet (GOOGL, Financial) was removed from Wedbush's Best Ideas List despite a 2.9% premarket rise, due to uncertainties surrounding the impact of AI on its business model. Analysts remain confident in Alphabet's long-term prospects but acknowledge potential volatility.
Pharmaceutical stocks, including Eli Lilly (LLY, Financial), Amgen (AMGN, Financial), and Merck (MRK), faced declines after President Trump announced plans to significantly reduce U.S. prescription drug prices. This move has raised concerns among investors about the potential impact on these companies' revenues.
monday.com (MNDY, Financial) experienced a 5% premarket surge following strong first-quarter results that surpassed analyst expectations. The company reported a 30% year-over-year revenue increase and raised its full-year revenue outlook, indicating robust growth prospects.
Shares of Tesla (TSLA, Financial) and other tech giants like Amazon (AMZN, Financial) and Apple (AAPL, Financial) saw gains after the U.S.-China tariff agreement, with Tesla leading the charge with a 7.5% increase. The reduction in tariffs is expected to benefit these companies by lowering costs and improving market sentiment.
The tariff agreement also had a positive impact on shipping and logistics stocks, with companies like Maersk and Hapag-Lloyd seeing significant gains. The reduction in trade tensions is anticipated to boost cross-border commerce and ease supply chain pressures.
In the consumer sector, Jefferies recommended buying shares of companies like Five Below (FIVE, Financial) and Nike (NKE, Financial), citing their ability to mitigate tariff-related headwinds. These stocks saw notable premarket gains following the U.S.-China agreement.
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