US stock futures rallied Tuesday morning after President Donald Trump announced a delay in implementing increased tariffs on the European Union over the holiday weekend. The Dow added 543 points, or 1.3%, while the S&P 500 climbed 1.5%, and the Nasdaq popped 1.7%. Trump said on Sunday that he would push back the proposed 50% levy deadline on the EU to July 9 following a request from Ursula von der Leyen, the president of the European Commission.
This follows Trump’s initial proposal to levy a 50% import tax on the EU, which was set to begin on June 1. Tuesday’s actions come after a volatile week on Wall Street, where all major indices slid more than 2% due to concerns over the proposed tariffs. The U.S. stock market was closed on Monday for Memorial Day.
“We’re still wary about chasing the SPX at these levels given complacency around two major areas of macro risk: tariffs and fiscal policy/yields, along with elevated equity valuations. Trump’s most bombastic tariff threats likely won’t become a reality, but he has still imposed substantial import taxes in the last four months, and his administration may not be finished,” wrote Adam Crisafulli of Vital Knowledge. This week, traders will closely monitor earnings reports, with several key companies set to announce their results.
More than 95% of S&P 500 companies have reported their earnings this season, with almost 78% surpassing analyst expectations, according to FactSet. Minneapolis Fed President Neel Kashkari has called for a cautious approach to interest rates, noting that the economic impact of President Trump’s tariffs remains unclear. Speaking in Japan, Kashkari said, “The most recent shock, driven by tariffs and trade policy uncertainty, is different from prior ones.
Stocks rally after tariff delay
A large increase in tariffs will likely increase inflation and decrease economic activity in the short run. Monetary policy faces a special challenge here, as it can push both inflation and economic activity up or down.”
Tesla shares rose more than 2% after CEO Elon Musk announced that he would shift his attention back to his companies and away from politics.
In a post on X, Musk stated, “I must be super focused on xAI and Tesla (plus Starship launch next week), as we have critical technologies rolling out.” Investors had expressed concerns that Musk was focusing too much on politics and not enough on managing his companies, including Tesla. Asia-Pacific markets traded mixed on Tuesday as investors continued to assess the global trade climate following President Trump’s announcement to defer the EU tariffs. Japan’s Nikkei 225 ended the day 0.51% higher at 37,724.11, while the broader Topix index rose 0.64% to 2,769.49.
In South Korea, the Kospi index fell 0.27% to close at 2,637.22, while the small-cap Kosdaq moved up 0.25% to 727.11. Mainland China’s Shanghai Composite index retreated 0.54% to close at 3,839.40, while Hong Kong’s Hang Seng Index gained 0.43% to end the day at 23,381.99. Meanwhile, India’s Nifty 50 benchmark declined 0.6% while the BSE Sensex dropped 0.79%.
Over in Australia, the S&P/ASX 200 advanced 0.56% to end the day at 8,407.6.
The three major U.S. indexes are coming off a rough week, with both the Dow and S&P 500 sliding around 2.5% last week. The Nasdaq fell 2.6%. Stock futures traded higher shortly after 6 p.m. ET as investors cheered President Trump’s announcement of the extension of the European Union’s tariff deadline.
Dow futures rallied more than 400 points, equating to a gain above 1%. S&P 500 futures added 1.2%, while Nasdaq 100 futures jumped 1.3%.
