Consumer relief from U.S.-China trade deal sends retailers' stocks surging

 Consumer discretionary stocks such as Best Buy, Amazon and Tesla are surging after trade deal between the U.S. and China

Shares of companies that sell retail goods were surging Monday, as the consumer discretionary sector as a whole was lifted by a preliminary agreement between the U.S. and China to set tariffs on Chinese goods at a 30% rate. The rally has put the sector neck and neck with the tech sector's premarket rally.

Best Buy Co. shares (BBY) are up 9.7% premarket, while Amazon.com Inc. shares (AMZN) are up 8.7% and Tesla Inc. shares (TSLA) are up 7.9%. Deckers Outdoor Corp.'s stock (DECK) is up 6.1%, while Nike Inc.'s (NKE) is up 6.8% and Lululemon Athletica Inc.'s (LULU) is up 6%.

The Consumer Discretionary Select Sector SPDR exchange-traded fund XLY, which counts the above names as holdings, is up 5.4% in premarket trading.

The consumer-discretionary sector is particularly sensitive to soft consumer demand and tariff-fueled macroeconomic uncertainty. The sweeping wave of tariffs announced by President Donald Trump on April 2, which he called "liberation day," rocked the markets, although last week's trade deal with the U.K. sparked optimism for more trade agreements and a thawing in the global trade war.

On Monday, the White House announced an agreement with China, which has been at the center of the tariff clash. The agreement reduces China's tariffs and eliminates retaliation, the White House said in a statement, as while retaining a U.S. baseline tariff on China. It also sets a path "for future discussions to open market access for American exports," the White House said.

Last week, J.P. Morgan cited Best Buy, along with Wayfair Inc. (W), as well as RH (RH), Mattel Inc. (MAT) and Academy Sports & Outdoors Inc. (ASO) as the names with the "highest upside potential" on China tariffs receding, followed by Dick's Sporting Goods Inc. (DKS) and Floor & Decor Holdings Inc. (FND).

Wayfair shares are up 15.1% and RH shares are up 16.6% in premarket trading on Monday. Mattel's stock is up 5.2% and ASO is up 8.8%. Dick's Sporting Goods shares are up 7.9% and Floor & Decor Holdings shares are up 6.9%.

"U.S. equities are charging higher on Monday morning as weekend trade negotiations between China and the U.S. have progressed significantly," Daniela Sabin Hathorn, senior market analyst at Capital.com, wrote in a note released Monday. "After several positive comments over the weekend, a joint statement on Monday morning revealed that both sides had agreed on a 90 day pause and that tariffs would come down by over 100 percentage points to 10%."

In a note released Monday, Jefferies recommended buying shares of Five Below Inc. (FIVE), Nike, SharkNinja Inc. (SN) and Yeti Holdings Inc. (YETI) on the tariff de-escalation. "Despite varying tariff-related headwinds from China, these strong brands can mitigate impacts due to their scale," wrote Jefferies analyst Randal Konik. "As trade discussions progress during the 90-day pause, management teams could witness significantly fewer costs, as most businesses have opted to plan with the assumption of a 145% tariff in place."

Five Below shares are up 12% in premarket trading, while SharkNinja shares are up 8.4%. Yeti's stock is up 9.8%.

Tech stocks rallying Monday include artificial-intelligence heavyweight Nvidia Corp. (NVDA), which is up 4.3%; Intel Corp. (INTC), which is up 3.9%; Marvell Technology Inc. (MRVL), which is up 8.2%; and Apple Inc. (AAPL), which is up 6.3%. Shares of Facebook parent Meta Platforms Inc. (META) are up 6.1%.

https://www.morningstar.com/news/marketwatch/2025051268/consumer-relief-from-us-china-trade-deal-sends-retailers-stocks-surging