What Happened?
A number of stocks jumped in the afternoon session after the major indices popped (Nasdaq +3.4%, S&P 500 +2.5%) in response to the positive outcome of U.S.-China trade negotiations, as both sides agreed to pause some tariffs for 90 days, signaling a potential turning point in ongoing tensions. This rollback cuts U.S. tariffs on Chinese goods to 30% and Chinese tariffs on U.S. imports to 10%, giving companies breathing room to reset inventories and supply chains.
However, President Trump clarified that tariffs could go "substantially higher" if a full deal with China wasn't reached during the 90-day pause, but not all the way back to the previous levels.
Still, the agreement has cooled fears of a prolonged trade war, helping stabilize expectations for global growth and trade flows and fueling renewed optimism.
The optimism appeared concentrated in key trade-sensitive sectors, particularly technology, retail, and industrials, as lower tariffs reduce cost pressures and restore cross-border demand.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Electrical Systems company Whirlpool (NYSE: WHR) jumped 5.3%. Is now the time to buy Whirlpool? Access our full analysis report here, it’s free.
- Industrial Packaging company Avery Dennison (NYSE: AVY) jumped 5%. Is now the time to buy Avery Dennison? Access our full analysis report here, it’s free.
- Industrial Packaging company International Paper (NYSE: IP) jumped 7.5%. Is now the time to buy International Paper? Access our full analysis report here, it’s free.
- Home Builders company TopBuild (NYSE: BLD) jumped 5.4%. Is now the time to buy TopBuild? Access our full analysis report here, it’s free.
- Home Builders company LGI Homes (NASDAQ: LGIH) jumped 5.4%. Is now the time to buy LGI Homes? Access our full analysis report here, it’s free.
Zooming In On International Paper (IP)
International Paper’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
International Paper is down 10.6% since the beginning of the year, and at $47.54 per share, it is trading 20.9% below its 52-week high of $60.09 from January 2025. Investors who bought $1,000 worth of International Paper’s shares 5 years ago would now be looking at an investment worth $1,480.
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