Dow Jones futures jumped early Monday, along with S&P 500 futures and Nasdaq futures, as the U.S. and China agreed to slash tariffs more than expected following "productive" weekend trade talks.
President Donald Trump said Sunday night that he will sign an executive order so the U.S. pays the same price for prescription drugs as the lowest price in the world. He says that will cut prices by 30%-80%.
The stock market rally dipped last week, with the major indexes still rangebound. However, many leading stocks broke out or flashed buy signals.
Tesla cleared an aggressive entry Friday. Palantir Technologies forged a new buy point.
Chinese giants Alibaba and Tencent are due this week, both near entries. Walmart kicks off retail earnings, with WMT stock in a buy zone. Two recent IPOs, Nvidia-backed data center play CoreWeave and aerospace systems firm Karman, also are on tap.
All of these stocks were rallying early Monday, some sharply.
Palantir stock is on IBD Leaderboard. Palantir and CoreWeave stock are on the IBD 50.
Dow Jones Futures Today
Dow Jones futures rose 2.5% vs. fair value. S&P 500 futures jumped 3% and Nasdaq 100 futures spiked 3.9%.
Futures signal the Dow Jones, S&P 500 and Nasdaq composite will clear their 200-day lines at Monday's open.
The 10-year Treasury yield rose several basis points to 4.46%.
Crude oil jumped 4%. Gold futures tumbled more than 3%.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
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U.S.-China Tariffs Slashed
The U.S. and China will temporarily slash tariff rates on each other in a dramatic de-escalation of a trade war between the world's two largest economies.
The U.S. will cut the 145% tariff on most Chinese imports to 30% by May 14, including a 20% tariff tied to fentanyl. China will cut its 125% tariff on U.S. goods to 10%. The U.S. tariff cuts don't apply to Trump's sectoral duties on steel, aluminum and more.
"We are in agreement that neither side wants to decouple," Treasury Secretary Scott Bessent said Monday. He added that the U.S. and China "had a very robust and productive discussion" on addressing President Donald Trump's fentanyl concerns. Also he said talks might lead to China buy more American-made products.
Bessent said later that the U.S. and China will meet in a few weeks to work on a more-permanent deal.
Various reports late last week suggested the U.S. might cut China tariffs from to 50%-60%, but President Trump posted Friday that 80% "seems right."
The 90-day tariff reductions follow lengthy U.S.-China trade talks in Geneva. Bessent and U.S. Trade Rep. Jamieson Greer met with China Vice Premier He Lifeng and other top Chinese officials. Bessent claimed "substantial progress" Sunday while Greer said the two sides "were able to come to an agreement."
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Stock Market Rally
The stock market rally paused after big weekly gains in the prior two weeks and three of the last four.
The Dow Jones Industrial Average dipped 0.2% in last week's stock market trading. The S&P 500 index sank 0.5%. The Nasdaq composite fell 0.3%. All are above their 50-day moving averages, but slightly below the 200-day line.
The small-cap Russell 2000 edged up 0.1%.
Leading stocks showed strength, with many breaking out or extending moves.
The 10-year Treasury yield rose six basis points to 4.37%.
U.S. crude oil futures jumped 4.7% to $61.02 a barrel last week.
Growth ETFs
The Innovator IBD 50 ETF rose 0.3% last week. The iShares Expanded Tech-Software Sector ETF edged up 0.2%, with PLTR stock a big holding. The VanEck Vectors Semiconductor ETF popped 2%.
ARK Innovation ETF fell 1.1% last week and ARK Genomics ETF plunged 6.8%. Tesla stock is the No. 1 holding across ARK Invest's ETFs. Cathie Wood's ARK also owns a big Palantir stake.
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Key Earnings
Alibaba and Tencent report this week, with both stocks around their 50-day lines within bases. Both are around early entries. but set to gap up on Monday. Alibaba and Tencent aren't especially affected by the U.S.-China trade war, but may give insight into how Trump tariffs are impacting the Chinese economy.
Walmart stock fell last week, but held above a cup-with-handle buy point, according to MarketSurge. WMT stock rose modestly within the buy zone early Monday. The Dow heavyweight may offer insight into Trump tariff impacts and its response.
CoreWeave stock will report for the first time as a public company. CRWV stock is in an IPO base. Investors could use Friday's high of 56.82 as a potential post-earnings entry. But shares might blow past that on Monday.
Space and aerospace play Karman will release its second post-IPO earnings report. Shares are flirting with record highs. A post-earnings move could offer a buy point. But it could clear that Monday.
Tesla Stock
Tesla stock popped 4.7% on Friday to 298.26, punching above its 200-day and several weeks of trading. That offered an aggressive entry above the May 2 high of 294.78.
Shares are set to surge early Monday.
Tesla stock has a lot of overhead, far below the Dec. 18 peak of 488.54.
Tesla stock is riding robotaxi optimism, with CEO Elon Musk sticking to plans for a June launch. The actual business is struggling, with Q1 earnings down 40%. Tesla told Austin workers on the Model Y and Cybertruck lines to stay home for Memorial Day week, Business Insider reported Friday.
Tesla Vs. BYD: EV Giants Near Buy Points For Very Different Reasons
Palantir Stock
Palantir stock fell 5.6% to 117.30 last week, but rebounded from the 21-day line. PLTR stock now has a handle. The new cup-with-handle base buy point of 125.26 is only fractionally lower. But the pause is giving some time for the moving averages to try to catch up.
Shares are popping toward a breakout early Monday.
Palantir reported strong earnings May 5 that met views, while a seventh straight quarter of accelerating revenue growth beat. The AI data analytics giant also guided higher.
What To Do Now
The market rally is showing constructive action. The indexes held steady after big gains while many leaders offered buying opportunities.
Investors could have added more exposure last week.
The indexes decisively clearing the 200-day line would be a green light to keep adding exposure. A break below the 50-day line, especially for the Nasdaq and S&P 500, would be a reason to scale back positions.
Dow Jones futures suggest U.S.-China trade talks will spur the indexes above the 200-day line.
Earnings season is still on, including Alibaba, Walmart and CoreWeave.
Keep working on those watchlists. Have your exit strategies set up, just in case.
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