Stocks extended their monthlong rebound on Monday after the U.S. and China rolled back some tariffs and agreed to discuss a compr🐻ehensive trade agreement. 

U.S. officials on Monday said they would 澳洲幸运5开奖号码历史查询:lower tariffs on Chinese goods to 30% from 145%, while China said it would slash U.S. tariffs to 10% from 125%. The deal leaves in place tariffs President Donald Trump imposed in February as punishment for China’s alleged role in America’s fentanyl crisis, along with levies on steel, aluminum, and cars. 

The S&P 500 on Monday was on track to close comfortably above its pre-“Liberation Day” level. The effective U.S. tariff rate, however, remains 澳洲幸运5开奖号码历史查询:well above where it was💫 just six weeks ago, leading some to wonder whether the tariff relief rally of the last month is sustainable.  

200-Day Moving Average Is the S&P 500's Next Test

“Stocks have staged an impressive recovery since the April 8 closing low,” wrote Adam Turnquist, chief technical strategist at LPL Financial, in a research note on Monday. (April 9 was the day President Trump 澳洲幸运5开奖号码历史查询:paused for 90 days the “reciprocal” tariffs that prompted one of the 澳洲幸运5开奖号码历史查询:sharpest sell-offs in recent memory.) However, Turnquist estimates that this rally’s biggest test will be whether the S&P 500 can overtake its 200-day moving average at about 5,750.

“A breakout above this area of overhead resistance would not only raise the probability of a sustained recovery, but also potentially open the door for institutional demand entering the market via renewed interest from 澳洲幸运5开奖号码历史查询:trend-following funds,” said Turnquist.

The 澳洲幸运5开奖号码历史查询:S&P 500 was up more than 3% in recent trading on Monday at 5,835. In its most bullish scenario, LPL Financial expects the S&P 500 to finish the year between 6,100 and 6,200, which would represent a full-year return of between 3.7% and 5.4%.

History Says Another Pullback Is Likely

But history tells us there could be more 澳洲幸运5开奖号码历史查询:pullbacks along the way, according to Turnquist. Over the past 75 years, any time the S&P 500 has retreated more than 15% from a record high, it has experienced an additional pullback of between 18% and 19%, on average, within the foll🦹owing 12 mont✨hs. 

The S&P 500 closed more than 15% below its record high on April 4🔴, and since that day, the index has experienced a maximum drawdown of 5.5%. If that remains its biggest pullback over the next year, it would be the shallowest maximum drawdown on record.