Wall Street witnessed a historic rally on Monday, May 12, as Tesla Inc., Apple Inc., Nvidia Corp., Amazon.com Inc., and other members of the “Magnificent Seven” added a staggering $837.5 billion to their collective market capitalisation. The surge was sparked by the announcement of a temporary easing of tariffs between the US and China, signalling a strong move toward de-escalating tensions that have disrupted global markets for over a year.

This rally marked the largest single-day market cap gain for these tech giants since April 9, when US President Donald Trump had earlier declared a 90-day pause on the intense tariff war that shook global investor sentiment.

US-China Tariff Easing Sparks Market Euphoria

In a joint move announced over the weekend in Geneva, the United States slashed tariffs on Chinese goods from 145% to 30%, while China reduced its duties to 10% on most American imports. This shift is being seen as a massive de-escalation, aimed at making trade between the two economic powerhouses viable again.

This announcement immediately triggered strong buying activity on Wall Street, particularly in the technology sector, which had been heavily exposed to the consequences of the tariff war.

Tech Stocks Lead the Charge

Among the top gainers:

• Apple Inc. surged 6%, despite ongoing production uncertainties. Notably, Apple still manufactures nearly 90% of iPhones in China, and the company had warned of a $900 million cost burden this quarter due to tariffs. The easing of tariffs offers some relief, even as iPhone production shifts increasingly to India.

• Amazon.com Inc. jumped 8%, thanks to its reliance on China-based sellers and suppliers. Many of the small and medium businesses on Amazon’s marketplace source goods from China, making the tariff cut a direct benefit to the platform’s ecosystem.

• Nvidia Corp., one of the biggest winners of the day, led the semiconductor sector rally. While there is still no clarity on whether the export restrictions to China will be lifted, the market responded positively. Peers such as AMD, Broadcom, and Qualcomm also gained between 5% and 6%.

Investors and Analysts Turn Bullish

With this turn of events, market sentiment has taken a sharp positive turn. According to Daniel Ives, global head of tech research at Wedbush Securities, the market is now eyeing new highs in 2025, supported by an anticipated broader deal between the US and China.

“With US/China clearly on an accelerated path for a broader deal, we believe new highs for the market and tech stocks are now on the table,” said Ives in a client note.

This statement has only added to the bullish outlook, as investors anticipate further gains in the tech sector over the next few months.

A Return of Confidence Across Wall Street

This rally was not just limited to big tech. Broader US equity indices also surged. The S&P 500 posted one of its best single-day performances in recent months, and the Nasdaq 100 returned to bull market territory, just a month after plunging over 20% from its previous highs.

Risk appetite returned to markets, especially as investors started unwinding defensive trades made during the height of April’s uncertainty. Strategies like shorting the US dollar, buying stock volatility, and expecting multiple Federal Reserve rate cuts have begun to reverse, fuelling further upward momentum in equities.

What It Means for India and Global Supply Chains

The temporary easing of trade tensions between the US and China also has positive spillover effects for India, especially with Apple increasing its production footprint in India. Apple had previously announced that a significant share of iPhones sold in the US during the current quarter will be Made in India, a strategic move to reduce dependency on China.

This opens up massive opportunities for India’s electronics manufacturing ecosystem, particularly in states like Tamil Nadu and Karnataka, where Apple’s manufacturing partners are expanding capacity.

Uncertainties Still Remain

Despite the optimism, some uncertainties linger:

• There’s no confirmation that Nvidia’s export restrictions to China will be lifted.

• The tariff relief is temporary, set for just 90 days, which means future negotiations will be critical.

• Experts caution that any breakdown in talks could quickly reverse gains, as seen in previous episodes of this long-running trade saga.

However, even with these risks, market sentiment has shifted decisively to bullish, with investors now seeing dips as buying opportunities — a stark contrast to the fear-driven selling of April.

A Tech-Led Market Recovery

The rebound in big tech stocks reflects the strategic importance of the sector in the global economy and its sensitivity to policy shifts. The “Magnificent Seven” — Tesla, Apple, Amazon, Nvidia, Meta Platforms, Alphabet, and Microsoft — have regained investor confidence, reinforcing their role as the driving force behind market movements.

Their performance on May 12 alone added nearly $1 trillion in shareholder wealth, a testament to the scale of market dependence on tech stocks.

Looking Ahead: What Should Investors Watch?

Over the coming weeks, the focus will be on:

• Further US-China trade talks, especially any announcements about permanent tariff reductions.

• The Fed’s stance on rate cuts, particularly after Monday’s easing in Treasury yields.

• Earnings guidance from major tech firms, which will now reflect the impact of eased tariffs.

If negotiations between the US and China continue on the current positive trajectory, investors could be looking at a powerful rally in the second half of 2025, led by tech.

Conclusion

The massive rally of May 12 marks a turning point in investor sentiment, especially for tech stocks that had suffered under the weight of trade war uncertainty. With the US and China agreeing on temporary tariff relief, and market participants pricing in greater chances of a broader deal, the Magnificent Seven are once again at the forefront of a potential tech-led bull run.

Investors will now keep a close eye on developments in trade policy, central bank moves, and earnings updates from tech majors — all of which will shape the trajectory of global markets in the months ahead.

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