U.S. equities surged midday Monday, powered by a surprise U.S.-China trade détente and a sweeping executive order by President Trump targeting pharmaceutical pricing. The Dow Jones Industrial Average jumped 1,058.80 points (2.57%) to 42,308.2, the Nasdaq leapt 727.54 points (4.06%) to 18,656.5, the S&P 500 surged 170.03 points (3.00%) to 5,829.94, and the Russell 2000 gained 7.23 points (3.60%) to 208.04.

Markets rallied sharply after the U.S. and China agreed to suspend steep tariffs imposed during a six-week standoff, returning to levels closer to those applied to allies like the U.K. The U.S. will reduce tariffs on Chinese imports from 145% to 30% for 90 days, while China will slash tariffs on U.S. goods from 125% to 10% over the same period.

Wedbush Securities called the outcome “a best-case scenario,” adding that it takes a near-term recession “off the table” and clears the way for renewed highs in tech and broader equities.

According to Bloomberg, Beijing secured nearly all its demands in the deal, including the establishment of a dedicated trade channel led by Treasury Secretary Scott Bessent. The two sides also committed to joint action on fentanyl enforcement, which could result in the removal of an additional 20% tariff on Chinese goods.

Contributing to the bullish tone was President Trump’s signing of an executive order aimed at slashing prescription drug prices by linking U.S. payments to the lowest prices paid in other developed countries. “We’ll slash the cost of prescription drugs, and we will bring fairness to America,” Trump posted on Truth Social, calling out pharmaceutical “profiteering” and foreign “freeloading” on American innovation.

The order directs the Department of Health and Human Services to push drugmakers toward “most-favored-nation” pricing within 30 days. If manufacturers fail to comply, the administration will consider importation of cheaper alternatives and aggressive antitrust enforcement to combat price discrimination.

A research note from goldman sachs issued prior to the executive action warned of significant implications for Medicare Part B drug revenues. The analysts projected as much as a 20% valuation hit to Regeneron’s Eylea and moderate but notable impacts to Amgen’s and Merck’s portfolios, depending on product exposure and biosimilar competition.

Despite the earnings headwinds for biopharma, investors appeared focused on the macro positives of trade stabilization and consumer relief.