[UNITED STATES] U.S. markets soared on Tuesday, buoyed by a mix of encouraging economic signals and a temporary reprieve in trade tensions. Investor sentiment improved following President Donald Trump’s latest decision to delay a contentious tariff hike, coupled with a surprise jump in consumer confidence.
A broad-based rally propelled all three major U.S. stock indexes higher, with technology stocks—particularly the AI-driven “magnificent seven” momentum group—leading gains. The tech-heavy Nasdaq emerged as the top performer.
The S&P 500 has now climbed to within 3.6% of its all-time closing high set on February 19, recovering from a steep drop of nearly 19% that followed months of market volatility spurred by Trump’s unpredictable tariff rhetoric, which has dominated much of his second term.
Investors have endured a turbulent ride since the President’s initial tariff threats in early 2021, as markets repeatedly sank and rebounded in response to shifting trade policies. While tariffs can shield domestic industries, analysts warn they may also provoke retaliatory actions from key trade partners, disrupt global supply chains, and hamper economic growth.
“When (Trump) came out with guns blazing April 2, the market thought the world was ending,” said Paul Nolte, senior wealth adviser and strategist at Murphy and Sylvest in Elmhurst, Illinois. “The selloff was so strong and quick that you would expect some rebound, and the rebound has been so sharp and quick that you would expect some type of pullback as investors digest it and ask themselves what the terrain really looks like.”
Recent signs suggest a more tempered approach from the administration. The White House's decision to delay a planned 50% tariff on European imports until July 9 has been viewed as a conciliatory step toward resolving trade frictions. Investors welcomed the pause, hopeful for a more stable policy outlook.
Trump’s latest move—postponing the threatened tariff hike on EU goods—opened the door to renewed negotiations with the 27-member bloc. Brussels responded with cautious optimism, signaling readiness for talks while emphasizing the need for equitable trade and addressing long-standing imbalances. A constructive dialogue between Washington and the EU could ease geopolitical tensions and bolster global market confidence.
“Investors have kind of figured Trump out a little bit,” Nolte added. “He’s like the poker player at the table that you know is making some bets and then when pressed by the other players at the table, he folds.”
On the economic front, a 14.4% surge in consumer confidence for the current month added further momentum to the rally, overshadowing a sharper-than-expected decline in core capital goods orders—a key indicator of business investment plans.
Richmond Federal Reserve President Thomas Barkin told Bloomberg that inflation and employment data remain stable, reinforcing expectations that interest rates will stay on hold until the broader economic impact of tariffs becomes clearer.
The Fed’s current stance on monetary policy continues to play a crucial role in market dynamics. With inflation under control and joblessness low, the central bank has room to maintain steady interest rates, offering investors a more predictable environment for long-term planning.
Investors now await minutes from the Federal Reserve’s latest policy meeting, due Wednesday, for further clarity. In bond markets, yields on long-term U.S. Treasuries dipped, with 30-year note yields seeing their steepest single-day decline since late April, mirroring a rally in long-dated Japanese government bonds.
The Dow Jones Industrial Average climbed 740.58 points, or 1.78%, to 42,343.65. The S&P 500 gained 118.72 points, or 2.05%, to close at 5,921.54. Meanwhile, the Nasdaq Composite surged 461.96 points, or 2.47%, ending at 19,199.16.
All 11 sectors of the S&P 500 advanced, with consumer discretionary and technology stocks leading the gains. Airline shares and large-cap growth names dominated the rally, while semiconductor stocks also outperformed ahead of Nvidia’s quarterly results, expected to show a 43.5% earnings per share increase on a 66.2% jump in revenue.
In contrast, PDD Holdings, the parent of Temu, slid 13.6% after posting a 47% decline in first-quarter profit and missing revenue forecasts. Other laggards included Fair Isaac Corp (-11.3%), VeriSign Inc (-3.6%), and AutoZone Inc (-3.4%).
Advancing stocks outpaced decliners by a 5.42-to-1 ratio on the NYSE, with 222 new highs and 27 new lows. On the Nasdaq, gainers led losers by a 2.54-to-1 ratio, with 3,206 stocks rising versus 1,264 falling. The index recorded 87 new highs and 63 new lows, while the S&P 500 posted 24 new 52-week highs and no new lows. Trading volume on U.S. exchanges totaled 16.98 billion shares, slightly below the 20-day average of 17.72 billion.
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