Wall Street stocks surged on Tuesday after U.S. President Donald Trump stepped back from his threat to impose 50% tariffs on European Union imports, easing trade tensions and boosting market sentiment as trading resumed following the Memorial Day break. Trump’s decision to delay the tariffs until July 9 allowed for further talks between the U.S. and the European bloc, providing investors with much-needed relief.
Trump’s Tariff Delay and Market Reaction
On Sunday, Trump restored the July 9 deadline for tariff discussions, a significant retreat from his earlier threat of imposing 50% tariffs on the EU. The president had announced the tariff plans on Friday, which were accompanied by increased levies on Apple’s iPhones. Glenmede analysts suggested that the tariff threat is likely a negotiation tactic aimed at pushing for dialogue on difficult issues such as non-tariff barriers. As a result, U.S. stocks rallied, with the Dow Jones Industrial Average rising by 507 points, or 1.22%, and the Nasdaq Composite climbing by 373.75 points, or 2.00%, as traders returned from the long weekend.
Sector and Stock Performance
All 11 S&P 500 sectors closed higher, with consumer discretionary and information technology leading the gains. Nvidia, the AI industry bellwether, surged 2.9% ahead of its quarterly earnings report due after the market close on Wednesday. The positive momentum was also reflected in bond markets, where long-dated U.S. Treasury yields dipped, and the 30-year note saw its biggest one-day fall since mid-April, mirroring a similar rally in Japanese debt.
U.S. Economic Data and Fed Outlook
In economic news, the Conference Board’s consumer confidence index rose to 98 in May, well above the expected 87, signaling improving sentiment. The U.S. Federal Reserve’s meeting minutes from its last policy session are due for release on Wednesday, which may provide further insight into future monetary policy. Additionally, personal consumption expenditure (PCE) data for May and a second estimate of first-quarter GDP are scheduled for release later this week. Minneapolis Fed President Neel Kashkari emphasized the importance of holding interest rates steady until the effects of higher tariffs on inflation become clearer.
Volatility and the Broader Market Outlook
Despite recent gains, Wall Street has experienced significant volatility, particularly after a sharp selloff last Friday sparked by concerns over rising U.S. debt and Trump’s latest trade policy changes. The S&P 500 had fallen almost 19% in April from its February record highs but is now approximately 4% away from its peak, as easing trade tensions and tame inflation data have contributed to a risk-on rally. However, PDD Holdings, the parent company of Temu, saw a 15.3% drop in its stock after reporting a 47% decline in first-quarter profit and missing revenue expectations.
Market Trends and New Highs
On the NYSE, advancing issues outnumbered decliners by a ratio of 5.38-to-1, while on the Nasdaq, the ratio was 2.95-to-1. The S&P 500 posted 18 new 52-week highs and no new lows, while the Nasdaq recorded 73 new highs and 41 new lows, signaling positive market sentiment despite ongoing challenges.
