Wall Street Cheers US-China Tariff Truce as Big Tech Stocks Surge

The recent agreement between the United States and China to pause their tariff war is sending a clear message to investors: tensions are cooling, and big tech is back in the spotlight.

After months of economic uncertainty, the two global powers reached a 90-day agreement to scale back trade penalties that have weighed on markets for years. Under the deal, the U.S. will lower tariffs on certain Chinese goods from 125% to 10%, while China has agreed to mirror those reductions on American imports. One tariff, a 20% levy tied to the U.S.'s accusation that China contributes to the fentanyl crisis, remains in place.

Still, the broader easing has triggered a swift and optimistic reaction from Wall Street. Shares of the Roundhill Magnificent Seven ETF (MAGS)—which represents leading tech companies like Apple, Microsoft, Alphabet, Amazon, Meta, Nvidia, and Tesla—surged 6% in premarket trading following the announcement. That spike adds to a strong rebound over the last month, during which the fund has climbed 18% from its April 8 low.

This isn’t just a reaction to headlines. The Magnificent Seven are riding high on solid fundamentals. First-quarter earnings from Microsoft, Alphabet, and other tech giants not only exceeded expectations, they sent a clear message: demand for AI, cloud computing, and digital infrastructure remains strong. According to Barclays, these companies beat earnings estimates by an average of 8%—a performance that stood out even in a volatile market environment.

Meanwhile, data from Goldman Sachs shows just how far ahead the Magnificent Seven are compared to the rest of the market. These seven companies posted an average earnings growth of 28% last quarter, while the other 493 companies in the S&P 500 managed just 9%. That disparity underscores why investors are once again leaning into tech as a safe bet for future returns.

“Momentum is returning to tech, not just because of the trade truce, but because the fundamentals are backing it up,” said a senior equity strategist at a New York investment firm. “These companies are continuing to deliver, and with tariffs cooling off, there's one less thing for investors to worry about.”

The timing is critical. With election-year uncertainty, geopolitical risks, and concerns about global growth still looming, markets are hungry for stability. A de-escalation in trade friction between the world’s two largest economies provides exactly that—and tech stocks are the immediate beneficiaries.

That said, not all experts are ready to call it a green light for tech-heavy portfolios. Some analysts warn that a short-term rally could be followed by renewed volatility if trade talks stall or inflation pressures return. Others suggest investors consider spreading risk across sectors rather than going all-in on the biggest names.

Still, there's little doubt that the Magnificent Seven have reasserted their dominance, both in performance and in investor sentiment. With the AI race heating up and capital spending on innovation rising, the spotlight is firmly back on the giants of Silicon Valley.

As global markets process the implications of this tariff pause, all eyes are now on whether the truce will lead to a longer-term trade resolution—or if it’s simply a temporary break in an ongoing economic tug-of-war.

Also Read:  US–China Tariff Talks Enter Second Day Without Breakthrough as Trump Claims ‘Great Progress’