U.S. stocks experienced a significant rally on Tuesday, following President Donald Trump’s decision to postpone a proposed 50% tariff on imports from the European Union. This strategic delay has sparked optimism among investors, alleviating concerns over a potential trade war escalation. As a result, the U.S. markets reopened after the Memorial Day holiday with a renewed sense of confidence.
The Dow Jones Industrial Average surged nearly 740 points, reflecting a robust 2.05% increase in the S&P 500 and a remarkable 2.46% jump in the tech-heavy Nasdaq Composite. Major technology stocks such as Nvidia, Tesla, and Apple saw significant gains, further contributing to the day’s positive momentum.
- Dow Jones Industrial Average: Up nearly 740 points
- S&P 500: Climbed 2.05%
- Nasdaq Composite: Increased by 2.46%
- Consumer Confidence: Rose in May after five months of decline
During the discussions with European Commission President Ursula von der Leyen over the weekend, Trump announced that the tariff hike, originally scheduled for June 1, would now take effect on July 9. In response, the EU agreed to expedite trade discussions to avoid the mutual drawbacks associated with implementing tariffs, according to EU trade chief Maroš Šefčovič.
Investor sentiment was also boosted by a rebound in consumer confidence, which increased in May after five consecutive months of declines. On Tuesday, more than 90% of S&P 500 components closed in the green, signaling strong market recovery. Additionally, small-cap stocks rallied, with the Russell 2000 index climbing over 2%.
The positive outlook extended to the bond market, where U.S. Treasurys rallied and yields experienced a decline. The yield on the 10-year Treasury slipped to 4.43%, while the 30-year yield fell to 4.94%. This strengthening of the dollar and favorable global bond market reactions indicate growing investor confidence amidst ongoing trade uncertainties.
As the market anticipates a busy week of economic data releases and corporate earnings reports, Minneapolis Fed President Neel Kashkari emphasized the need for the central bank to maintain steady interest rates amidst this backdrop of trade uncertainty. Notably, tech giants like Nvidia are gearing up to announce their quarterly results, drawing attention from investors keen on market trends.
This rally has helped to reverse last week’s losses, which were driven by initial tariff threats from Trump. Analysts note that while the market remains volatile, there is a prevailing sense of hope and optimism following this latest announcement.
