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Indexes rise: Dow 2.81%, S&P 500 3.26%, Nasdaq 4.35%

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Stocks outperform safer assets due to trade detente

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Apple ( AAPL ) rises on report of considering raising iPhone prices

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Wall Street's "fear gauge" slips below 20 points

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NRG Energy ( NRG ) jumps after $12 billion assets deal

(Updates with final closing prices, adds volume)

By Sinéad Carew and Shashwat Chauhan

May 12 (Reuters) - Wall Street's three major indexes

rose sharply on Monday with the S&P 500 marking its highest

level since early March as a U.S.-China agreement to temporarily

slash tariffs brought some hopes for the easing of a global

trade war, which U.S. President Donald Trump ignited in early

April.

The U.S. and China announced on Monday that they would slash

steep tariffs on each other for 90 days. The U.S. said it will

cut tariffs imposed on Chinese imports to 30% from 145% while

China said it would cut duties on U.S. imports to 10% from 125%.

Investors showed some relief by favoring riskier assets and

turning away from more defensive bets, but they were still left

waiting for clarity on where tariffs would ultimately settle.

"It's a relief rally because there was a lot of anxiety and

angst about tariffs between the U.S. and China," said John

Praveen, managing director at Paleo Leon in Princeton, New

Jersey, adding that the world's two biggest economies appeared

to be working to avoid the worst-case tariff scenarios.

"They are going to scale it down to much more reasonable

levels so the fall-out from tariffs will probably be more

manageable and limited," said Praveen.

Chris Brigati, chief investment officer at SWBC, an

investment company in San Antonio, Texas, said "the market

perceives any progress as positive."

"The market is celebrating it for the moment, but in the

long run, there could be complications, and we could see some

negative implications," Brigati said.

U.S. stocks had weathered steep losses and unusually high

volatility after Trump announced tariffs on multiple U.S. trade

partners on April 2.

Since then, an April 9 announcement of a 90-day pause for

countries besides China, solid earnings reports and last week's

U.S.-UK limited trade agreement have helped both the S&P 500 and

the tech-heavy Nasdaq regain their lost ground.

On Monday, the S&P 500, the Nasdaq and the Dow all boasted

their biggest single-day percentage gains since April 9 and the

S&P broke above its 200-day moving average for the first time

since late March.

The Dow Jones Industrial Average rose 1,160.72

points, or 2.81%, to 42,410.10 for its highest close since March

26.

The S&P 500 gained 184.28 points, or 3.26%, to finish

at 5,844.19, its highest close since March 3 while the Nasdaq

Composite gained 779.43 points, or 4.35%, to 18,708.34

for its highest finish since February 28.

Nasdaq closed more than 22% above its lowest session close

in the April tariff sell-off but was still almost 8% below its

Dec 16 record close.

Wall Street's "fear gauge", the CBOE Volatility Index

, which had hit a peak of 60 in April due to tariff fears,

traded below 20 on Monday for the first time since late March.

In commodities, safe-haven gold fell about 2.6%.

Of the 11 S&P sub-sectors, defensive utilities was

the sole loser by the end of the session, falling 0.68% while

the strongest sectors were heavyweight consumer discretionary

, which added 5.66% and technology, which

climbed 4.66%.

In technology, Apple ( AAPL ) rallied 6.3% after a report

that it was considering raising the prices of its fall iPhone

lineup.

The earnings season is winding down, with more than 90% of

the S&P 500 companies having reported so far. Numbers from

retail giant Walmart ( WMT ) are due later this week.

Shares in NRG Energy ( NRG ) soared 26.2% and lead S&P 500

advancers after the utility said it would acquire power

generation assets from energy infrastructure investment firm LS

Power in a deal valued at $12 billion.

Several Federal Reserve officials, including Chair Jerome

Powell, are slated to make public remarks over the week.

Traders expect the Fed to deliver two 25-basis-point rate

reductions by the end of 2025, with the first cut now expected

in September, according to data compiled by LSEG.

Advancing issues outnumbered decliners by a 2.83-to-1 ratio

on the NYSE where there were 165 new highs and 43 new lows.

On the Nasdaq, 3,285 stocks rose and 1,158 fell as advancing

issues outnumbered decliners by a 2.84-to-1 ratio. The S&P 500

posted 15 new 52-week highs and 3 new lows while the Nasdaq

Composite recorded 83 new highs and 50 new lows.

On U.S. exchanges about 20.20 billion shares changed hands

compared with the 16.52 billion moving average for the last 20

sessions.