May 12 (Reuters) - The S&P 500 hit its highest since early March on Monday as a crucial U.S.-China agreement to slash tariffs put investors at ease after weeks of uncertainty around the future of global trade.
The U.S. will cut extra tariffs it imposed on Chinese imports in April this year to 30% from 145% and Chinese duties on U.S. imports will fall to 10% from 125%, the two countries said on Monday. The new measures are effective for 90 days.
"The reduction in fears is a positive catalyst in the short term, but that doesn't necessarily say much about the economy or the market a week from now or a month from now," said Patrick Kaser, a portfolio manager at Brandywine Global.
"There's still uncertainty. It's still hard for companies to make decisions on spending. The market is acting like the risk has gone away, but I don't think that's how a lot of businesses and companies are going to view the situation."
At 11:26 a.m. ET, the Dow Jones Industrial Average (.DJI), rose 922.95 points, or 2.24%, to 42,172.33, the S&P 500 (.SPX), gained 142.83 points, or 2.52%, to 5,802.74 and the Nasdaq Composite (.IXIC), gained 618.07 points, or 3.45%, to 18,546.98.
Both the S&P 500 and the Nasdaq were set for their biggest single-day jumps since April 9. The S&P also surpassed its 200-day moving average for the first time since late March.
Megacap and tech stocks led gains, with Nvidia (NVDA.O), rising 4.4% and Tesla (TSLA.O), adding 7.2%.
An index of semiconductor stocks (.SOX), also leapt 6.2% to an over two-month high.
Apple (AAPL.O), advanced 5.2% after a report said the company was considering raising the prices of its fall iPhone lineup.
Upbeat earnings reports, Trump's softening stance on tariffs and a U.S.-UK limited trade agreement have helped both the S&P 500 and the tech-heavy Nasdaq erase all losses incurred following April 2. The blue-chip Dow has recouped nearly all its declines too.
Wall Street's "fear gauge", the CBOE Volatility Index (.VIX), retreated to 19.4 on Monday – a level last observed before the tariff turmoil in April.
Nine of the 11 S&P sub-sectors traded higher, though utilities (.SPLRCU), lagged with a 0.8% fall.
NRG Energy (NRG.N), jumped 23.7% after the utility said it would acquire power generation assets from energy infrastructure investment firm LS Power in a deal valued at $12 billion.
The earnings season is winding down, with more than 90% of the S&P 500 companies having reported so far. Numbers from retail giant Walmart (WMT.N), are due later this week.
Several Federal Reserve officials, including Chair Jerome Powell, are also slated to make public remarks over the week.
Traders expect the Fed to deliver two 25-basis-point rate reductions by the end of 2025, with the first cut now expected in September, according to data compiled by LSEG.
Advancing issues outnumbered decliners by a 3.18-to-1 ratio on the NYSE and by a 2.63-to-1 ratio on the Nasdaq.
The S&P 500 posted 12 new 52-week highs and 3 new lows while the Nasdaq Composite recorded 75 new highs and 36 new lows.
Reporting by Shashwat Chauhan and Pranav Kashyap in Bengaluru; Editing by Savio D'Souza and Devika Syamnath
