Stocks Surge On Tariff Cuts… And Trump’s Drug Pricing Executive Order 5/12/25

0:02Live from the Nasdaq market site in the heart of New York City's Times Square this is fast money Here's what's on tap tonight. Buy America is back again. Following the U.S. and China agreeing to a temporary rollback on tariffs, stocks posting off the charts move higher. But does this relief rally have legs? We'll debate that. Plus, drug pricing drama. The president signing an executive order aimed at lowering prices here in America for medicines. The sector slumping early in the day before rebounding. We'll find out why the stocks didn't about face. And later, inside Disney's monster 20 % move over the last week.

0:33What's behind RH and Wayfair's couch-surfing surge? And now two of our traders are handling the big move in banks. I'm Melissa Lee. Coming to you live from Studio B at the NASDAQ on the desk tonight, Tim Seymour, Karen Feinerman, Dan Nathan, and Bono and Eisen. And we start off with the monster move for stocks. The market's surging as the U.S. and China temporarily slashed tariffs following a weekend of negotiations. The Dow rallying more than 1 ,100 points, while the NASDAQ spiked more than 4%. The S &P 500 up 3%. Chipmakers among the big winners. The SMH Semiconductor ETF rising 6 % today. NVIDIA, AMD, Qualcomm leading the charge.

1:07NVIDIA now up 13 % just this month. Traders also piling into consumer discretionary names. The sector up almost 5%. Lululemon soaring almost 9%. And Nike jumping 7%. The transport's also having a big day. The group up more than 1 ,000 points since April 9th. With all of the risk on gains, the benchmark 10-year yield climbing now back near 4%. and a half percent. CNBC senior Washington correspondent Eamon Jabers is here with the latest details on what happened this weekend. Eamon. Hey there, Melissa. The statement released by the two countries came in very early this morning with both countries agreeing to temporarily suspend most of the tariffs between their economies.

1:46Under the agreement, President Trump's tariffs will be cut from 125 percent down to 10 percent. But that 20 percent tariff relating to fentanyl is going to remain in place. So that leaves a total tariff rate of 30 percent on China. The pause is set to begin on Wednesday, setting up a 90-day negotiating period between the two countries. Treasury Secretary Scott Besson said on CNBC this morning the negotiations are not going to be easy, but that both sides are approaching the talks with respect and a recognition that they have mutual interests here. And in the Roosevelt room earlier today, the president said he may speak to Chinese leader Xi Jinping before the end of this week.

2:26So that is maybe an indication that progress might continue to come quickly. Still, a lot of the hard issues remain to be settled, including Chinese non-tariff barriers to trade. And the open question of how much, if any, manufacturing is going to move back to the United States as a result of any agreement that the United States and China can come to. All right, Eamon, thank you. Eamon Jarvis from Washington. Detail shmeetails. The rally's back on. Everything is fixed, right, Tim? Well, that's the way we were moving today. Well, look, on Friday, I don't think anybody here, self-included, expected anything substantive.

3:02Now, we got something substantive, but I'm not still sure what we did. I mean, if you think about it, China at this point, outside of that fentanyl carbide that Eamon just talked about, is basically now at the same reciprocal tariff, the 10 percent, as our best trade partners. So I'm just wondering, I'm really wondering what was this all about? Therefore, I'm not even sure what has happened yet. I'll let those folks figure that out. I'll talk about the markets. And if we look at intraday on the 7th to where we closed today, I think the Nasdaq's not only in a new bull market, but it's in a bull market from that close on the 8th.

3:38It was almost a 25 percent move. And if you think about certain parts of the economy that I think were given a fresh sense of, OK, we don't know where the next six months are going to go. But we know that the dynamic around trade is something that, as I think we've said, The worst in terms of that rhetoric is out there. In fact, I think the White House now moves on to tax cuts. I mean, I just think that this is part of that playbook, whether there's real detail or not. Semiconductors are up 40 percent from that intraday low. That's right, 40 from the intraday low on the 7th and have outperformed the S &P by 15 percent since then.

4:14You know, there's market leadership if you believe that this wasn't just a snapback rally. And again, through some important 200-day moving average levels. So it obviously is hugely good news, right, that the rhetoric has cooled down and hopefully that we're in a place where even if they can't get there in 90 days, that if there's constructive discussions going on. Absolutely. Extensions. That seems reasonable and actually seems likely. And so I'm pleasantly surprised that China sort of blinked, actually. And we blinked. I was going to say, who blinked? We both did. We both did. Well, we blinked first.

4:49I think we both did. And also, I mean, the pressure on China. Look at what what you know, what happened to their stocks. Right. Baba up huge. I mean, so they've been really feeling the pressure as well. So one of the things we still don't know about where things can be manufactured. If you are importing goods from China, you really need to think more about it's already happened a lot, but more about diversifying your supply chain, because who knows? And so I think that, but for China, though, that's been a very scary thing. And so to not have a deal, I think, was just as bad for them. One thing, though, the VIX was in the 50s, not that long ago.

5:31It's now south of 20, right? So for me, I am a lot closer to a seller here. And NetNet on the day was a small net seller than I am a buyer. We still got a lot of hurdles, but I do think the rhetoric is very, very positive versus what it could have been. So I'm looking at you. Yeah. Are you going to say as a server linings guy? No, no, no. Because I feel like our illustrious host. No, no. In that you don't think that it's reflective of still the damage that can be done. You said something on Thursday, and I pushed back pretty hard. You said something like the bottom or the worst case scenarios are in.

6:07And I said no. And I kind of was pushing back a little bit. because the way I see it, it's really not about the markets right now. It really is about the disruption that we had in our economy, which I don't believe it's going to turn around on a dime. Because if you're thinking about 30 % tariffs, that's a 30 % tax on the companies that are importing. They have to make a decision whether they're going to eat some of those or pass it through to consumers. We already have a situation where consumer confidence going forward was low. I don't think it was all to do with tariffs. OK, small business confidence was low.

6:40Look at the 10 year U.S. Treasury yield. It's at 4.47 percent at 4.6 percent a month ago. That is what caused the White House to blink. And I think that's really important. So if we have a rally like this, we have a dollar going higher, but we don't have the 10 year yield coming down. Go back a month and a half when the White House, they said we don't care about equities. We care about the 10-year yield. Well, we're in a situation right now where the equity market is saying one thing, and that's fine. I think all of us are happy that the volatility that we saw in the first week of April is out of the way.

7:15In the stock market, at least in actually the treasury market, we're not seeing the volatility. This has been a very orderly climb higher. I'd say the dollar move today was a bit aggressive. Like, we haven't seen those sorts of moves. I know, but, you know, I mean, it really didn't see a downtick all day long. So I guess the point is you mentioned the VIX. The VIX is down below 19. It was 50. But the 10 year yield could be the thing that causes this to come back in. If we start seeing that move higher, which goes back to my view. And this is why I think I pushed back. But you were right. And I'm sorry.

7:49This is on Thursday. That's what. No, but you were really you were right. OK. But what I'm saying right now is that I don't think the economy is out of the woods. I think that there's a scenario here where a 30 percent tax on imports right now, we have this huge imbalance. We take in 450 billion from China and we buy, you know what I mean? And they buy 150 billion for us. And I just think there's a scenario here where this might not play out the way the stock market is suggesting today. In that conversation, though, part of my point was that I think that the worst or I was positing that the worst of the tariff rhetoric was in.

8:27but the damage to the economy has yet to be seen. And I think there are two different things. I don't know. What do you think, Paduan? Well, to answer for it, I still think that we don't know. Long and invariable lags, right, to kind of quote the Fed. So until we kind of get data two, three, four months from now, we need to see what the impacts have already had. What I do think is on the positive side is that, one, at least two seemingly behemoth adversaries are willing to come to the table and put on pause. We can argue until we're blue in the face about whether it made sense to ratchet a 125 and then 145, whether that was a de facto embargo or not.

9:03But at least it seems that cooler heads are prevailing. And until there is something in place, we're not essentially putting in a de facto embargo. To your point about, you know, the variable lags on the economy, I'm with you. There is probably some damage that's been done, but clearly the extent of that damage is much lower now than it would have been had this been a much more protracted situation. So unfortunately, you know, with earnings out of the way, we have, you know, a little bit of economic data. But I really think this was really the thing. And it's an unfortunate situation when stocks are kind of trading on headline risk.

9:37I think that's concerning. I'm with you. If we're trading like this on headline risk, volatility is still volatility. 4 % of the upside is still 4 % to the upside. VIX at 18-19 seems slightly less. Well, the pain trade was always to the upside. The pain trade was where sentiment was about as bad as it got. And part of the other conversation we had on last Thursday was, you know, soft data, surveys, all that mean nothing until we get hard data that tells us the economy is falling out of bed. And I realize you can wake up one day and the hard data could have turned dramatically. Soft data tends to try to smooth it out.

10:09But, you know, so back to today's rally, should it be any surprise that you had a big unwind? I mean, gold's down two and a half percent. Doesn't mean the gold trade is over. You know, the dollar rallied a bit, but I mean, the dollar fell 10 percent. And this is a major currency. So some of these snapbacks are fine. And I guess, you know, the Treasury market is a fascinating place to be looking, because I actually still think we'd rather see a 5 percent 10 year than a 350 10 year. And I think that's what was happening when there was a blink of some kind. Whoever wants to acknowledge it, they don't have to.

10:43There's no question there was some sense going into a big auction week of treasuries and a very important 10-year auction that, you know, some of the people that have been buying our bond market were starting to also possibly blink. So aside from the 10-year treasury moving higher, I think it's also interesting that the Fed funds track or the CME that does that, it didn't really move the Fed funds lower. I mean, so right now, the June 18th meeting, it looks like a slam dunk that the Fed does nothing. The July meeting goes to like— They were doing nothing either way, weren't they? I know, but my point is what is interesting about it from an economic standpoint is that the Chinese are stimulating their economy.

11:18They're ready, or they were ready to do that. That doesn't mean that it was going to make too much of a difference because they've been stimulating their economy for a couple of years. They have deflation, and we have a worry of inflation, right? And so I don't know if a 30 percent tariff changes a whole heck of a lot of the way the Fed is seeing the kind of push and pull from their dual mandate. All right. We already saw companies that were laying off workers. Right. It'll be interesting to see what we hear from the ports in L.A., whether they're seeing like all the way in influx. Peter Brookfart said something really interesting to me earlier.

11:49Do we go from all of these ships where you couldn't give them away about a week ago or two weeks ago to seeing a massive inflationary demand for that sort of shipping to come back? And what does that mean? There are other taxes that can be put on these goods that we're importing right now. And it could be higher logistics costs, for all we know. There could be a whole host of other things. So, again, that's why I don't believe the economy is out of the wood. If you don't think that the Fed funds at four and a half percent of the upper band is restrictive right now, then you should be buying stocks.

12:20If that's the next move that we're going to see the 10 year move lower and then the Fed is going to start cutting because they can sooner than expected. Then that makes equities look that much more attractive. All right. For more on the rally, let's bring in Stu Kaiser, city's head of equity trading strategy. Stuart, great to have you with us. Thank you. What did you make of this rally? Is it a game changer? I mean, we think the news over the weekend was a game changer. You know, we've basically been slowly trimming tail risks, I would say, for the last two to three weeks. And I think on the weekend, you went from trimming to chopping.

12:50And I think you cut off a significant amount of the tail risk. To your point, it doesn't mean you're out of the woods at all. I mean, our view a month ago was your near-term risk was to the upside on positive tariff news. And then your medium-term risk is kind of to the downside if you get, you know, downward pressure on EPS and on GDP growth. I think the Fed will be happy about this. They wanted to wait and see. And I think this opens up some more space for them to wait and see. But look, the bottom line is in one queue, two thirds of two thirds of S &P 500 companies basically punted and just left guidance where it is.

13:20How that resolves itself over the next one to two quarters is probably going to largely determine the direction of equity markets. How do you think of the trajectory of this market rally? Is there still room to the upside in that maybe we overshot to the downside when we were at 48, whatever it was? And how much of an upside shot is there from here? Yeah, I mean, I think I think there's still room to the upside. I think if you're someone who's less positive and doesn't want to be long this market, prefer to be short. Those folks are going to step out of the way and they're going to let the systematic buying from risk parity, from Voltarget and from CTAs, you know, play itself out.

13:54There's no reason to fight that. Those are emotionless buyers and they're not fundamentally driven. So you let that play out. And how much is that worth? It's hard to know. On Friday, I would have told you it's probably worth a couple hundred points of S &P, a little bit less now. But again, every investor knows about these flows and they're not going to get run over by them. they're going to be careful. And I think we're going to I think we're getting some headlines now even about tax policy. We're getting the first whiff of what's going to look like the White House is on to the next the next act.

14:20And again, leave the detail and the important detail and ultimately the impact of the economy on effective tax rates that I do think are are going to be somewhat of an issue. But I think there's more goodies. I'm getting back to the market that we have here. And I'm getting back to a market that I think also if we get some sense even coming out of earnings season. I think people can sort it any way they want about stabilization of earnings outlooks. You just said it. They kind of punted. But, you know, some of these guys weren't as bad as it sounded because why should they have been positive? So where can we go?

14:50Throw some levels at us because I think the market can continue to trade higher. Yeah. Could you get the S &P back to 6 ,000? I mean, you know, no problem. I think you could get there. To your point, though, tax and budget is a real and important negotiation. We highlighted that back in late March. Obviously, it got washed out in the news flow by tariffs. But, you know, the bottom line is whatever deal they announce when the CBO scores, it is going to look probably relatively, you know, deficit expanding. And that could be an issue. We could get the long end of the bond yield curve moving higher.

15:19I think the risk from race, to your point, lower 10-year on weak economic data, unequivocally, you know, bad for equity markets. But I would say higher 20-year and out based on, you know, inflation and policy risk is equally an issue. So, look, you know, again, I would not try to step in front of this rally. I think you have to let it play out. I think it can run from here because the bottom line is most institutional investors captured very little, if any, of the rally we've had to date. You know, it was we were half joking, but you only had to own the market for 60 trading minutes to capture the entire 17 percent rally off the low.

15:53The flip side of that means, though, if you didn't own it for those 60, you didn't capture much of it. So you're almost in a it's not a full mo. It's a fear of I missed out. And the question I think now is, do we get engagement, another level of engagement to the upside? Or do people hope they get a little pullback and are kind of aggressive dip buyers? So, you know, I think there's more upside, but it's not a clean trade. Everyone doing FOMO in their head. Is that a thing? So how much, though, of this rally today do you think was on what Tim talked about with the tax package? Because that's sort of been coming and percolating the last few days.

16:26And, you know, that would be a positive. Yeah, I mean, I think almost all today was tariff. The market has largely been expecting those 2017 tax cuts to get extended. The question has the House wants to extend them. The Senate wants to make them permanent. But I think the base case for most folks is the vast majority, if not all, that is going to get extended. So to me, look, you went into the weekend. If you would poll clients, you know, which we did, you know, people were expecting, oh, maybe we get down to the 50 to 70 percent range in the best case on China tariffs. And we come out of it at 30, 10 of which has already been announced and 20 percent of which is fentanyl, which in theory could be rolled back pretty easy.

16:59So I think most of this was tariff driven. And if we get a good outcome on taxes, that's potentially another leg higher. All right. And by the way, there could be other deals in the works at this point. Stu, good to see you. Thank you. Stuart Kaiser. Meanwhile, the Jets airline ETF taking flight today at more than three percent. The move coming even as air traffic breakdowns and mounting delays are hitting one of the nation's busiest airports, Newark, here in New Jersey. Not here in New Jersey. Over in New Jersey. Phil LeBuzz got the latest. Phil. Hey, Melissa, let's start first off with the daily recap of cancellations and delays.

17:31We've had the same story basically for about two weeks now. Today, 84 flights canceled in and out of Newark. That's about 8 % of the daily flights with cancellations totaling more than 167. And all of this raises the question, what is being done to fix air traffic control to ensure the safety of air traffic control for the area that is monitoring flights in and out of Newark. Well, we heard today from the Secretary of Transportation. He and others have said, look, here's the game plan. Immediate fix, communications and radar. Some of that has already happened, but there's a long way to go. They're also going to be adding redundancies and also cutting flights.

18:12Yes, there will be a meeting on Wednesday where United Airlines will be there, along with the other airlines and the FAA as we take a look at shares of United Airlines. United has already cut 35 daily flights. CEO Scott Kirby has said, look, we should have everybody cutting flights. There should be a cap on flights here. It's not mandated right now by the FAA, but they will come out of this meeting probably with some kind of an agreement in terms of who can fly, how often in and out of the airport. Take a look at American and Delta. They also have a presence at Newark Liberty, though it is United's third busiest hub.

18:47So United really dominates that market. That meeting, again, scheduled for Wednesday. And just for a point of reference, Melissa, there are about 470 daily flights. Depends on the day. It fluctuates a little bit. You know, some days are a little busier than others. And that makes Newark the 10th busiest airport in this country. Not a good place to have these issues popping up with air traffic control. Phil, thanks. Phil LeBeau on Newark. So we knew that United was going to cancel some of its flights out of Newark for this reason, Tim. I would think in some ways it's a positive for the airlines are cutting capacity.

19:25And that's a good thing. Not really, oft rewarded or oft punished for capacity increases for sure. I think a lot of the pain in airline stocks was, I mean, Newark has a microcosm for issues that are going on in a number of different airports and a number of things that are going on with air traffic control. I get it. I think airlines were punished. Delta was halved. United was halved in a short amount of time. We're not talking about a small bleed. I mean, these things were cut in half. Meanwhile, Delta is now up almost 52 percent off that intraday low, 52 percent. So I just think we're getting back to the focus on airlines for the fundamentals.

20:01But they are very cyclical. Remember, fuel prices are a lot cheaper than they were also six months ago. So I sold upside calls for all that I haven't said in Delta today just because I think that move is something I'm supposed to be paid for. Ten minutes ago, I just got an email from Scott Kirby, the CEO of United. Personally to you or was like a bash. No, but to anybody who has a flight coming up in a few weeks. But part of the email I think is really interesting. And it doesn't actually make me that much more comfortable in flying in general. Does he say that every flight in and out is safe?

20:29Every United pilot is trained for a wide range of potential issues, including radar or communication outages. Okay. I mean, like, I hope they are. You know what I mean? But, like, some of this stuff is kind of beyond us, you know, or beyond even a pilot or something like that. So I think there's going to continue to be some trepidation about that. And we really hope there's no major accident because we've already seen some this year. And I think that, you know, cutting capacity, oil, this and that, whatever, that's fine. But you have one major incident in an airport that's as important as Newark.

20:58And, you know, this industry is going to have a hard time. Coming up, Apple in focus as the tech giant I's iPhone price hikes ahead of its fall reliefs. And why CEO Tim Cook is keeping up his charm offensive with President Trump, despite the reciprocal tariff rollback. That's next. Plus, some housing hype in today's rally, the major moves in some home-related retailers like RH and Wayfair, and how our traders are navigating those jumps. Don't go anywhere. Fast Money is back in two.

21:30You're watching Shares at Coinbase after hours. The stock popping over 6 percent. On news, it will replace Discover Financial in the S &P 500. Discover shares unchanged at this hour. This move will be effective May 19th. All right. Apple soaring more than six percent in the pause on most Chinese tariffs. CEO Tim Cook seemingly keeping up his charm offensive, though, speaking with President Trump this morning about his plans to invest more in U.S. production. The company also reportedly looking to raise iPhone prices this fall, but not citing tariffs as a reason for the hikes. Of course not. For more on all this, let's bring in Steve Kovacs.

22:03Steve. Hey there, Melissa. Yeah, the president said this morning that he thinks Tim Cook is going to up that 500 billion dollar investment in the United States over the course of his term. But however, I would just point back to previous comments that Trump has said about what Apple is doing in the United States and what actually happens in reality. We've seen this many times. Trump, especially in his first term, claiming that Apple is going to build more factories here, never really materialized. But look, the story out of this is nothing has really changed for Apple in the last 24 hours. That's because they already got the exemptions to the so-called Liberation Day tariffs over about a month ago.