On May 12, 2025, a U.S.-China trade truce served as a catalyst for positive recovery in the S&P 500, following previous market difficulties.
S&P 500 Recovery After Trade Truce
The announcement of a trade truce between the U.S. and China led to significant market gains. This agreement followed a period marked by tariff policies initiated by President Trump, which had a substantial impact on global markets since April 2025.
Positive Market Impacts
The immediate positive effects on the S&P 500 and Dow Jones restored investor confidence. Indices marked some of their strongest gains in recent months. Mark Johnson, Senior Market Strategist at DEF Advisors, noted: "Recent trade war truce announcements between the U.S. and China have been pivotal in driving market gains, with stocks leaping after the truce was declared on May 12."
Lessons from Past Crises
April 2025's downturn echoed the 2020 COVID-19 pandemic market crash, highlighting vulnerabilities in trade-reliant sectors. Analysts note that agreed pauses in tariffs typically result in temporary market bounces. Experts suggest this recovery is part of a broader cyclical trend.
The recovery of indices amid the U.S.-China trade truce underscores the importance of economic relations between global powers for market stability. Long-term policy changes could have a more profound impact on future recovery.
