Sarina Trangle
2 min read
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News of the agreement between the U.S. and China to lower tariffs for 90 days sent stocks up, particularly shares in consumer discretionary companies.
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Furniture and home goods stores, such as Williams-Sonoma and Wayfair, along with athletic retailers, including Dick's and Nike, made significant gains.
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Toy makers also stand to benefit from the deescalation, J.P. Morgan said in a research note Monday.
Consumer stocks ranging from cruise operators to furniture retailers jumped Monday, lifted by U.S.-China trade developments.
The S&P 500's consumer discretionary sector was recently up more than 5%, helped by news that the U.S. and China have walked back tariffs. Those gains, which easily outpaced those for the broader index, came as the White House announced a 90-day deescalation period in the trade war with China. (Read Investopedia's full coverage of today's trading here.)
Some of the biggest gainers in the index included cruise operators Carnival (CCL) and Norwegian Cruise Line (NCLH); athleticwear sellers Lululemon Athletica (LULU) and Nike (NKE); and furniture and home goods company Williams-Sonoma (WSM).
J.P. Morgan analysts in a Monday note examined how much companies would need to hike prices to maintain their gross profit while paying tariffs. Those that no longer need to consider steep price increases, which could deter customers, stand to benefit from the 90-day pause, analysts said. This includes toy companies, sporting goods stores and furniture and home good retailers.
Some of the companies named by J.P. Morgan saw their stock soar on Monday, including furniture retailers Wayfair (W) and RH (RH), whose shares were recently up more than 21% and 17%, respectively; sports retailers Academy Sports & Outdoors (ASO) and Dick's (DKS), whose shares gained about 15% and 9.5%, respectively; and toy company Mattel (MAT), whose stock rose about 9.6%.
While working towards a longer-term agreement, the U.S. will lower tariffs on Chinese imports to 30%, and China will cut its tax on U.S. imports to 10%, the Trump administration said early Monday.
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