Wall Street witnessed brutal trading last week, with the major indices suffering the worst weekly fall in more than two years. The Dow Jones Industrial Average and the S&P 500 tumbled 5.7% and 5.9%, respectively, while the Nasdaq Composite Index shed 6.5%. The Facebook (FB – Free Report) -led tech selloff, Fed rates hike, and a trade war brewing between the United States and China were the major culprits.

However, the worries seem to be abating, thanks to the news that the Trump administration has agreed to exempt South Korea from steel tariffs and start negotiating with China to avert a global trade war, which has threatened economic growth and hammered financial markets around the world.

Last week, Trump signed an executive memorandum to impose tariffs of up to $60 billion on Chinese imports targeting the technology, telecommunications and apparel sectors. In response, China has proposed a list of 128 U.S. products worth $3 billion as potential retaliation targets. The list includes wine, fresh fruit, dried fruit and nuts, steel pipes, modified ethanol and ginseng, with a potential 15% duty, and pork and recycled aluminum goods with a possible 25% tariff.

Global trade tensions are likely to threaten the nine-year bull market in the weeks ahead, as talks between the two countries are yet to unfold and thus, keep volatility alive. As a result, most investors’ are still cautious as to how the negotiations will take place and what its impact on the financial world will be. Further, Washington turmoil and geopolitical tensions will continue to weigh on the stocks.

Bulls Remain Intact

Aside from trade war fears, long-term market fundamentals remained bullish. Encouraging domestic and international fundamentals, strong corporate earnings and the new tax legislation are the biggest catalysts for the stock market this year. Additionally, growth in the U.S. economy has been solid, buoyed by an impressive labor market, higher wages, increasing consumer spending and record consumer confidence.