US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer speak to the media after trade talks with China in Geneva, May 11, 2025 (Valentin Flauraud/Getty Images)

Stock futures soar as US agrees to slash Chinese tariffs to 30% for 90 days

Futures tied to the S&P 500 Index (SPY) rose as much as 3% early on Monday morning.

David Crowther

5/12/25 3:40AM

Global markets were jolted into the green early on Monday after a bilateral statement from the United States and China signaled a reprieve in the trade war that has been top of investors’ concerns for much of this year.

Per the statement, the additional levies added by two of President Trump’s executive orders, those numbered 14259 and 14266, are set to be removed, with the earlier order, EO 14257, modified so that the US is “suspending 24 percentage points of that rate for an initial period of 90 days, while retaining the remaining ad valorem rate of 10 percent on those articles pursuant to the terms of said Order.” China is also modifying its rates. The end result of the relevant arithmetic is such that:

US tariffs on Chinese goods will drop to 30%, from 145%.*
Chinese tariffs on US goods will drop to 10%, from 125%.

The announcement resets the trade clock for the world’s two largest economies, giving representatives 90 days to hammer out a more detailed deal.

At the time of writing, the SPDR S&P 500 Trust is up as much as 3%, similar to the rise of Hong Kong’s Hang Seng Index, which closed up 2.98%.

Futures contracts tied to the tech-heavy Nasdaq 100 were even more elevated, rising more than 3.5%, led higher by tech giants like Apple, Nvidia, and Tesla.

European markets were more modestly green, with the STOXX 600 up 0.5%. In early trading in London, the FTSE 100 was broadly flat, with investors pausing buying after a breathless rally that saw the index notch 15 consecutive gains.

*This includes the original 20% levy, introduced by the Trump administration in response to fentanyl.

Matt Phillips2h

Margins, and selling the news: analysts look to explain Oracle's tumble

The somewhat counterintuitive tumble in Oracle shares continued into afternoon trading Friday, despite Wall Street analysts’ more-or-less favorable reaction to Oracle’s investor day presentation Thursday, where executives said the company’s AI cloud business would eventually sport margins of between 30%-40%, far better than the figures reported by The Information back on Sept. 7.

And yet, the stock is on its way to its worst day in the last six months. What gives?

Gil Lauria, who covers Oracle for D.A. Davidson & Co. — who has it at “hold” with a $300 price target — has a theory, telling Sherwood:

“Investors are disappointed that the entire growth acceleration in Oracle is from the Oracle Cloud Infrastructure business, and that Oracle expects the rest of the business to grow low single digits.

The other disappointment came from Oracle acknowledging that the GPU rental business only had 30-40% gross margins, far lower than the 80% gross margins for the rest of the business.”

Other analysts we’ve chatted with on background say they’re not convinced the margin story is the source of today’s slump, pointing to the also plausible explanation that the drop might just be a sign traders bought the stock ahead of the presentation to analysts on Thursday anticipating positive announcements, and now they’re selling simply selling the news.

Analysts generally like what they heard from Oracle, but shares are down

Gil Lauria, who covers Oracle for D.A. Davidson & Co. — who has it at “hold” with a $300 price target — has a theory, telling Sherwood:

“Investors are disappointed that the entire growth acceleration in Oracle is from the Oracle Cloud Infrastructure business, and that Oracle expects the rest of the business to grow low single digits.

The other disappointment came from Oracle acknowledging that the GPU rental business only had 30-40% gross margins, far lower than the 80% gross margins for the rest of the business.”

Jon Keegan4h

Analysts generally like what they heard from Oracle, but shares are down

The big news out from the Oracle AI World conference was broadly positive: that margins on cloud infrastructure can be as high as 35%, and that the company predicts $166 billion in infrastructure revenue by 2030.

And in the wake of that news, today UBS raised its price target for Oracle shares to $380 from $360, saying they are undervalued.

But investors appear to have some concerns about Oracle’s huge capex plans, which are fueled by huge AI infrastructure deals with OpenAI and Meta, as shares dropped over 7% in Friday trading.

Analysts have pointed to Oracle’s high cash burn as it pursues its AI build-out and potential financing needs as flies in the ointment that could blunt the impact of the company’s strong longer-term growth forecasts.

On Friday, Jeffries analysts wrote:

“Questions remain about ORCL’s capex requirements to meet growing demand, as there was no forward-looking commentary on capex at the Analyst Day. Capex will need to ramp in line with [Oracle cloud infrastructure] revenue growth, raising concerns about ORCL’s financing options to support this expansion.”

However, if that’s the reason why the stock is getting hit today, it would mark a distinct change in how investors are evaluating the AI trade. Companies have tended to be increasingly rewarded for their aggressive capex commitments to enhance the boom, based on optimism that investments in this would-be revolutionary technology will bear fruit.

Friday’s dip comes on the back of a strong run leading up to the yesterday’s investor conference, fueled by a flurry of AI headlines. Oracle shares have gained over 18% in the past three months and more than 70% so far this year, well outpacing the Nasdaq’s approximately 7% and 16% rise over the same time periods.

Matt Phillips6h

AST SpaceMobile drops after Barclays cuts rating to “underweight”

AST SpaceMobile, which provides cellular services from space, dove in early trading after Barclays analysts cut their rating on the shares to “underweight” (essentially a sell) from “overweight” (or a buy), citing “excessive” valuation on the still money-burning company. The fact that analysts went from “buy” to “sell” — with no momentary stop at a “hold” or “neutral” rating — makes it a fairly rare “double downgrade.”

They wrote:

“Valuation has run ahead of fundamentals... In our last update, we increased our price target from $38 to $60 as we took a more constructive view on pricing; we found it supportive that TMUS/Starlink launched a text only service for $10 per month and believe that AST products which will be richer (text, call, broadband) could see higher prices points. Since then the stock price has doubled from $48 to $95.7.”

With the shares up almost 120% over the last month through Thursday, and a price-to-forward-sales ratio of 140x — the Nasdaq Composite is around 5x — the stock might be due for a cooling-off period.