By Alisha Haridasani
Investors responded enthusiastically Monday to the news that the United States and China were "putting the trade war on hold," with the Dow Jones Industrial Average crossing 25,000 for the first time in two months.
The S&P 500 and the Nasdaq were also up after the United States announced over the weekend it would hold off on imposing tariffs on China to address the countries' trade imbalance.
In return for the reprieve from tariffs, China announced it “will significantly increase purchases” of U.S. exports, specifically agricultural and energy goods, according to a joint statement from the two governments released by the White House. The two sides also agreed to “strengthen cooperation” on intellectual property protections, but crucial details about how much of what good China will purchase, and at what cost, remain undecided.
The market rallied even without details of just how much China has committed to buying. "It's really the removal of negative news that drives markets higher, more so than the announcement of more positive news," said Mark Hackett, chief of investment research at Nationwide.
Trump touted the deal in a series of tweets on Monday as "one of the best things to happen to our farmers in many years." The president also assured his followers: "Fair Trade, plus, with China will happen!"
The apparent truce was the result of three days of trade negotiations in Washington, where American officials appear to have backed away from Trump's tough talk on tariffs, for the time being.
Trump said last month that he would consider imposing import taxes on $150 billion worth of Chinese goods, and Beijing vowed to retaliate by levying its own tariffs on a range of American products, from denim to orange juice.
The U.S. had also barred companies from doing business with the Chinese electronics company ZTE, punishing it for allegedly violating trade sanctions on North Korea and Iran. But last week, Trump agreed to help save the company, perhaps using ZTE's weakened position as a bargaining chip in the trade negotiations.
It’s still unclear what the administration has decided to do with its penalties on ZTE.
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