U.S. stocks soared on Tuesday as President Donald Trump announced the postponement of a proposed 50% tariff on imports from the European Union. The decision gave investors renewed confidence, lifting market sentiment significantly.
The pause helped ease investor concerns about a deepening trade war and opened the door for faster progress in upcoming negotiations.
The Dow Jones Industrial Average surged nearly 740 points, and the S&P 500 advanced by 2.05%. The tech-heavy Nasdaq Composite jumped 2.46%, driven by strong gains in shares of Nvidia, Tesla, and Apple.
Markets reopened after the Memorial Day holiday to a wave of encouraging developments. U.S. President Donald Trump announced over the weekend that, after discussions with European Commission President Ursula von der Leyen, the planned tariff increase—originally scheduled for June 1—would be delayed until July 9.
In response, the European Union agreed to speed up trade negotiations, aiming to avoid what EU trade chief Maroš Šefčovič described as the “mutual pain of tariffs.”
Consumer Confidence Bounces Back
A rebound in consumer confidence, which increased in May after five straight months of declines, gave investor sentiment an additional boost. Tuesday’s widespread market rally pushed over 90% of S&P 500 components into positive territory. Small-cap stocks also advanced, with the Russell 2000 rising by more than 2%.
Optimism also spread to the bond market, with U.S. Treasurys rallying as yields declined. The 10-year yield edged down to 4.43%, and the 30-year yield fell to 4.94%. The dollar gained strength, while global bond markets reacted favorably to speculation that Japan may reduce its long-term bond issuance following recent market turbulence.
Investors are now shifting focus to a packed week filled with economic reports and corporate earnings. Minneapolis Fed President Neel Kashkari urged the central bank to keep interest rates unchanged, citing continued uncertainty surrounding global trade.
Meanwhile, Nvidia is preparing to release its quarterly earnings on Wednesday, with reports from Okta, Macy’s, and Costco also expected shortly thereafter.
Tuesday’s rally managed to offset the losses recorded last week, which had been sparked by Trump’s initial tariff threats. Analysts note that the ongoing back-and-forth has maintained market volatility while still fueling a sense of cautious optimism.
