Stocks Rally to Start the Week—Is This the Calm Before the Crash?

Markets opened strong on May 13, but seasoned investors know euphoria can be a warning sign. The S&P 500’s latest sugar high ignores three looming threats: overleveraged retail traders, Fed hawkishness, and that pesky little thing called ’valuation.’

Wall Street’s amnesia strikes again—just because stocks bounced doesn’t mean the bear market’s over. Remember: the 2008 crash had seven ’all-clear’ fakeouts before the real plunge.

Meanwhile, crypto quietly eats traditional finance’s lunch. Bitcoin’s up 12% this month while bank stocks tread water. Maybe that ’barbaric relic’ isn’t so primitive after all.

The U.S. stock market jumped on Monday after President Donald Trump reached an agreement with Chinese officials over tariffs, effectively cutting taxes on both sides.

The Nasdaq ROSE 3.40% in response to a trade agreement between China and the United States. The Dow Jones also climbed by 2.38%, and the S&P 500 added 2.58%. It looks like the stock market may be able to recover quickly and that much of the pressure will be taken off as a result of the tariff deal.

The question that may persist among investors is whether the United States is still headed for a stock market crash or not. There was concern in recent weeks that the ongoing trade war WOULD combine with the lack of interest rate cuts to cause a crash on par with that of Black Monday back in 1987. The very investor who predicted that crash has been saying that a new crash would occur unless interest rate cuts were issued by the Federal Reserve.

The Fed has been hesitant to issue cuts with inflation so high, though, worried about how another cut would push inflation higher. What many economists did not expect was for TRUMP to come to an agreement with China and to do it so quickly as well. Now both countries seem to be backing down from the trade war, and Trump has made his political statement about how tough he plans to be on tariffs and fair treatment for US commodities and businesses.

There are several factors working to benefit the stock market right now. First of all, Trump’s pause on tariffs issued recently and expected to last for 90 days is helping the market climb and regain its lost ground. As a result of that pause, many stocks are back to where they were NEAR the beginning of the year.

The next beneficial factor is this trade deal with China. It is coming fast on the heels of a trade agreement between the United States and the United Kingdom announced just last week, so the stock market should be in a good position to make some incredible gains. We may see record gains now because of these trade agreements, since that resolves much of what investors and analysts feared about the state of trade.

With the market climbing, the value of the US dollar is likely to climb as well, and investors will end up with more money to spend on stocks, pushing the market higher. Investors need to be aware of the knockdown effect of the trade agreement and how it benefits the wider economy, and they would be wise to make their investments sooner rather than later while stock prices are still on par with their 2025 starting points.