Market Monitor News May 12 ( NRG Energy, Amazon, Meta Platforms UP - CVS Health DOWN)

Wall Street Surges on Temporary Trade Truce Between US and China

US-China Tariff Agreement Boosts Market Optimism

Wall Street kicked off the trading week with significant gains on Monday, boosted by news that the United States and China have temporarily agreed to dramatically reduce import tariffs. Investors responded enthusiastically, driving indices sharply higher on hopes that this détente could help prevent a potential recession.

The Dow Jones Industrial Average surged 2.8%, while the broader S&P 500 advanced 3.3%. The tech-heavy Nasdaq Composite outperformed, jumping an impressive 4.4%.

Tech Stocks Lead the Rally

Technology giants led the upward momentum, benefiting directly from easing tensions.

Amazon (AMZN | +8.07%) saw substantial gains, along with Meta Platforms (META | +7.92%), Apple (AAPL | +6.18%), and Nvidia (NVDA | +5.44%).

Analyst Dan Ives from Wedbush described the agreement as "very bullish for the tech sector," emphasizing that reduced supply chain concerns will likely drive further market highs this year.

Tesla (TSLA | +6.75%) also surged significantly, helped by the positive impact of easing tariffs on its key manufacturing operations in China, which contributed roughly 22% to the company’s revenues last year.

Chinese tech stocks listed in the US similarly rallied. Alibaba (BABA | +5.76%), JD.com (JD | +6.47%), Baidu (BIDU | +5.08%), and PDD Holdings (PDD | +6.2%) all benefited from the improving trade outlook.

Pharma Stocks React to Trump’s Drug Pricing Initiative

The pharmaceutical sector drew attention as President Donald Trump signed an executive order aimed at reducing drug costs by targeting middlemen rather than directly imposing price controls. Initially cautious, pharmaceutical stocks eventually rose as markets interpreted the policy shift positively.

Major companies like Pfizer (PFE | +3.64%), Merck (MRK | +5.87%), Bristol Myers Squibb (BMY | +3.72%), and Eli Lilly (LLY | +2.86%) saw strong gains, signaling investor optimism that the restructuring might ultimately benefit drug manufacturers.

Conversely, CVS Health (CVS | -3.23%) declined due to concerns over its pharmacy-benefit management business, Caremark.

Telehealth and direct-to-consumer drug company Hims & Hers (HIMS | +6.25%) advanced, benefiting from its business model, which aligns well with the administration’s goal of lowering consumer drug prices.

Economic Optimism Boosts Energy and Commodities

Positive market sentiment extended to commodities, with West Texas Intermediate crude oil climbing 1.5% to $61.95 per barrel. In contrast, gold prices fell by around 3%, reflecting diminished safe-haven demand amid easing geopolitical tensions, settling at $3,240 per troy ounce.

Bond yields rose, with the US 10-year Treasury yield reaching its highest level in a month, signaling growing investor confidence that a recession might be avoided. The US dollar strengthened significantly, pushing the euro/dollar exchange rate lower to approximately 1.1095.

Major Deals and Market Movers

NRG Energy (NRG | +26,21%) soared after announcing its acquisition of a substantial portfolio of natural gas power plants from LS Power Equity Advisors, valued at approximately $12 billion.

Upcoming Earnings Reports

Investors will closely monitor upcoming earnings this week, including reports from Cisco (CSCO | +3.18%), Walmart(WMT | +0.03%), Deere (DE | +0.61%) & Applied Materials (AMAT | +7.96%).