US stocks staged a partial recovery on Monday after initially plunging on fresh tariff concerns.
The Dow Jones Industrial Average rebounded from a steep intraday drop after President Donald Trump announced a temporary halt to tariffs on Mexican goods.
The move eased investor anxiety, helping the broader market trim losses, though tech stocks remained under pressure.
The Dow Jones Industrial Average closed down 122.75 points (0.28%) at 44,421.91, significantly recovering from its session low of 665.6 points.
The S&P 500 slid 0.76% to 5,994.57, while the Nasdaq Composite dropped 1.2% to 19,391.96.
Meanwhile, the iShares MSCI Mexico ETF (EWW), which tracks Mexican equities, surged more than 2% following the tariff pause.
Market sell-off reverses after Trump-Sheinbaum agreement
Stocks initially tumbled after Trump imposed 25% tariffs on Mexico and Canada over the weekend, alongside a 10% tariff on Chinese goods.
The news triggered a broad sell-off, with global equities sinking as investors feared escalating trade tensions.
However, a statement from Mexico’s President Claudia Sheinbaum helped stabilize markets. Following a conversation with Trump, Sheinbaum reassured investors that Mexico had reached a temporary agreement with the U.S.
“We had a good conversation with President Trump, conducted with great respect for our relationship and sovereignty,” Sheinbaum wrote on social media.
Trump later confirmed the agreement on Truth Social, stating that Mexico had agreed to deploy 10,000 National Guard troops to curb drug trafficking at the US-Mexico border.
He added that negotiations would continue for the next month, signaling potential relief from prolonged trade tensions.
Market strategists believe Trump may be using tariffs as leverage rather than a long-term economic policy.
Defensive stocks lead gains
Despite the market turmoil, five out of 11 S&P 500 sectors finished higher on Monday.
Consumer staples and health care led the gains, each rising 0.5% as investors shifted toward defensive stocks.
Energy and utilities also advanced, adding 0.4% each.
Technology and consumer discretionary stocks lagged, with losses of 1.4% and 1.2%, respectively.
While Monday’s market action signaled some relief, uncertainty remains as investors await further trade developments.
With Trump’s one-month pause on Mexico’s tariffs, markets will closely watch Canada’s response and the progress of ongoing U.S.-China negotiations.
Analysts expect continued volatility in the coming weeks as businesses and policymakers adjust to the shifting trade landscape.
Meanwhile, Boston Federal Reserve President Susan Collins said on Monday that policymakers should take a measured approach to interest rate decisions.
“We’re seeing continued growth near trend, an economy that’s much more closely aligned, and a labor market where indicators suggest we’re near full employment—which is a good place to be,” Collins said in an interview with CNBC.
Given these conditions, Collins emphasized that the Federal Reserve has no immediate need to cut rates, stressing the importance of patience and caution in policy decisions.
“That means, in my view, it’s appropriate for policy to remain patient and careful,” she said. “There’s no urgency for making additional adjustments, especially given all of the uncertainty.”
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