Nike's stock soared 6.66% in pre-market trading on Monday, as investors reacted positively to a breakthrough in US-China trade relations. The sportswear giant's shares were part of a broader rally in retail stocks, which saw significant gains following the weekend trade talks between the two economic powerhouses.

The surge in Nike's stock price can be attributed to the reduction in tariffs announced by both the United States and China. This development is particularly beneficial for Nike, as the company has substantial manufacturing operations in China and a significant presence in the Chinese market. The lowered trade barriers are expected to reduce costs and potentially boost sales for Nike in both countries.

The trade agreement between the US and China includes a 90-day period where China will reduce its tariffs on US goods to 10% from as high as 125%, while the US will lower its restrictions to 30% from 145%. This move is seen as a positive step towards normalizing trade relations between the two nations, with both sides expressing a desire to avoid economic decoupling. The establishment of a mechanism for continued discussions on economic and trade relations further bolsters optimism in the retail sector, potentially leading to long-term benefits for companies like Nike.