President Trump announced over the holiday weekend a decision to delay imposing a 50% tariff on the European Union. The Dow Jones Industrial Average jumped 740.58 points, or 1.78%, to finish at 42,343.65. The S&P 500 rose 2.05% to 5,921.54, and the Nasdaq Composite surged 2.47% to 19,199.16, snapping their respective four-day losing streaks.
President Trump disclosed on Sunday that he would push back the 50% tariff deadline on the EU to July 9, following a request from Ursula von der Leyen, the president of the European Commission. This decision came after Trump initially proposed an import tax of 50% on the EU set to begin on June 1. U.S. consumer confidence data released on Tuesday was positive, buoyed by hopes of eventual trade agreements.
Tesla shares rose approximately 7% following CEO Elon Musk’s announcement that he was refocusing on his companies rather than political matters. Other tech-related stocks also saw gains. Outside of the technology sector, shares of U.S. Steel advanced roughly 2% following reports that Japan’s Nippon Steel is expected to close its acquisition of U.S. Steel for $55 per share.
Tuesday’s broad market rally came after the U.S. equities market was closed on Monday in observance of Memorial Day. More than nine out of 10 S&P 500 stocks were higher, with the Russell 2000 gaining about 2.5%. Despite recent volatility, traders are closely monitoring earnings reports due later this week.
Trump delays controversial EU tariffs
Over 95% of S&P 500 companies have reported this earnings season, with nearly 78% surpassing analyst expectations, according to FactSet. International markets also climbed on Tuesday amid easing trade tensions.
European indexes such as Germany’s DAX 40 saw significant gains, hitting new intraday highs. The Memorial Day weekend box office brought in a record $326 million, which positively boosted shares of companies like AMC Entertainment and Marcus Theatres. The strong performance was driven by new releases such as “Mission: Impossible – The Final Reckoning.”
Rising yields could curtail equity market valuations, according to Scott Chronert, U.S. equity strategist at Citi.
“Higher rates, from a discounting of future cash flows perspective, draw down or keep a lid on where equity market valuations can go,” Chronert mentioned. Barclays expects that consumer spending might slow down due to macroeconomic uncertainty and evolving White House policies. Jonathan Millar, an economist at Barclays, noted that policy-related headwinds are expected to intensify in the coming months, potentially leading to decreased consumer spending.
Japan’s Nippon Steel is anticipated to finalize its purchase of U.S. Steel for $55 per share, a deal previously blocked but now back on track. President Trump referred to the acquisition as a “partnership,” citing major investments from Nippon in the U.S.
Despite tariff controversies, Morgan Stanley maintains an overweight rating on Apple, asserting that a 25% tariff on iPhone imports is insufficient to motivate reshoring U.S.-bound production. The company has been shifting manufacturing to India due to favorable trade relations.
Market conditions remain largely influenced by trade developments and investor sentiment. Broad market rallies and sector-specific gains reflect a dynamic environment as businesses and policymakers navigate ongoing economic challenges and strategic decisions.
