US stocks rally
On June 18, the US stock market saw a sharp rally after President Donald Trump said in a tweet that he and Chinese President Xi Jinping “will be having an extended meeting next week at the G-20 in Japan.” The tweet raised investors’ hopes about a near-term solution to the ongoing US-China trade war.
Today at 11:10 AM ET, the S&P 500 Index, the NASDAQ Composite Index, and the Dow Jones Industrial Average were up 1.3%, 1.9%, and 1.5%, respectively, on the day.
Trump’s tariffs and hopes for a trade deal
In the last year, the US-China trade war has taken a significant toll on investors’ sentiments. The trade tensions between the world’s two largest economies heightened after the Trump administration accused China of backtracking on the agreed terms of the trade negotiations.
President Trump increased tariffs on $200 billion worth of Chinese goods imported into the US on May 10. Soon after Trump’s tariffs came into effect, China retaliated by raising tariffs on $60 billion worth of US imported goods.
Trade tensions got uglier when the Trump administration restricted Chinese tech giant Huawei from transacting with its US suppliers, including Intel (INTC), Broadcom (AVGO), Qualcomm (QCOM), NVIDIA (NVDA), Advanced Micro Devices (AMD), and other tech giants Google (GOOGL) and Microsoft (MSFT).
Why it matters
Meanwhile, media reports about Chinese consumers’ boycott of Apple (AAPL) products triggered a sell-off in tech companies, including Apple.
In May, Apple, Microsoft, NVIDIA, Qualcomm, Intel, and Micron (MU) lost 12.8%, 5.3%, 25.2%, 22.4%, 13.7%, and 22.5%, respectively.
Therefore, Trump’s tweet today about his “very good telephone conversation with President Xi” and their planned meeting on the sidelines of the G20 Summit has come as a big relief to investors, who are now hoping for a trade deal soon.
Today at 11:25 AM ET, Apple, Microsoft, NVIDIA, Qualcomm, Intel, AMD, Broadcom, and Micron were up 2.6%, 1.4%, 6.1%, 3.7%, 3.6%, 5.2%, 5.3%, and 7.0%, respectively.