Dow adds 1,000 points, S&P 500 up 3% after the U.S. and China slash tariffs

Stocks rocketed higher Monday morning after the U.S. and China announced an agreement to reduce their reciprocal tariffs, offering a sense of relief for investors who'd feared a significant economic downturn from President Donald Trump's trade policies.

Stocks rocketed higher Monday morning after the U.S. and China announced an agreement to reduce their reciprocal tariffs, offering a sense of relief for investors who'd feared a significant economic downturn from President Donald Trump's trade policies.

The Dow Jones Industrial Average opened about 1,000 points higher, an increase of about 2.5%. The S&P 500, the broadest stock index, added 3%. The tech-focused Nasdaq added 3.9%.

But shortly after 10 a.m., the major indexes gave up some gains following remarks from Trump that he would continue to pressure the European Union with elevated tariffs.

Beyond stocks, other signs pointed to growing optimism that the economic damage of tariffs could end up being limited. Most notably, the odds that the Federal Reserve will keep interest rates at current levels through its July meeting surged nearly 10 percentage points on fears that current levels of inflation will not abate. There had been growing expectations that an economic slowdown related to tariffs would push the Fed to cut rates in order to boost the economy.

In a joint statement early Monday, the U.S. announced it would slash the duties levied on Chinese imports from 145% to an all-in rate of 30%, while China’s levies on U.S. imports would drop from 125% to 10%. For the U.S., the 30% rate represents a 10% baseline rate plus a 20% rate imposed to get China to curb fentanyl flows.