U.S. stocks soared on Tuesday as markets reacted well to a temporary pause in rising trade tensions between the U.S. and the European Union. President Trump’s decision to delay a planned 50% tariff hike on EU imports until July 9 stoked investor optimism and lifted major indexes higher.
By midday, the Dow Jones Industrial Average (DJI) jumped 1.74%, adding over 650 points. The S&P 500 (GSPC) rose 2.03%, while the Nasdaq Composite (^IXIC) led gains with a 2.43% surge, fueled by strength in technology shares. This rally is a sharp turnaround after Friday’s losses and follows Monday’s market closure for Memorial Day.
A stronger-than-expected consumer confidence reading and falling Treasury yields further boosted risk appetite, with easing bond-market jitters contributing to broader market momentum.
Market Movers:
- Nvidia (NVDA) +3.04%: Shares climbed after reports were released that the company is preparing to release a lower-cost AI chip tailored to the Chinese market. The move is a workaround to U.S. export restrictions, allowing Nvidia to maintain market share in China. Investors are also gearing up for the company’s earnings report tomorrow, widely considered one of the quarter’s most anticipated.
- Apple (AAPL) +2.64%: The stock was strengthened by the broader tech rally and renewed optimism over international trade. As a major beneficiary of eased transatlantic tensions, Apple saw tailwinds from both tariff relief and improving global sentiment. The stock also gained as investors repositioned ahead of the company’s expected AI product updates next month.
- Tesla (TSLA) +6.77%: Tesla surged after Elon Musk announced he would increase his focus on the EV company, reassuring investors following recent distractions tied to X and xAI. The move comes as Tesla's market share in Europe fell sharply in April, but Musk’s recommitment helped offset those concerns. The delay in EU tariffs also eased pressure on Tesla’s overseas operations.
- Trump Media & Technology Group (DJT) -10.69%: Shares sank despite announcing plans to raise $2.5 billion to build one of the largest corporate bitcoin treasuries. The stock fell as investors questioned the company’s pivot to crypto and the strategic risks of concentrating resources in volatile digital assets. The initiative includes a $1 billion note offering and $1.5 billion in new equity, raising dilution fears.
Consumer Confidence Rebounds, but Caution Remains
The Conference Board’s latest reading showed U.S. consumer confidence rebounded in May to 98, exceeding expectations and ending a five-month dip. The optimism can be attributed in part to Trump’s recent decision to delay aggressive tariff measures, which appeared to alleviate some economic uncertainty. However, the data also highlighted underlying caution: consumers reported postponing large purchases and drawing more heavily on savings. This mix of optimism and restraint could influence future retail and services sector performance, particularly if tariff concerns return.
Bond Market Steadies After Japan Reassures
The bond market, which has been a source of volatility in recent sessions, calmed on Tuesday following signs that Japan’s central bank may scale back bond sales. The yield on the 30-year U.S. Treasury (TYX) fell back below 5% after spiking to 5.15% last week, the highest since 2007. This decline provided relief to equities, particularly rate-sensitive sectors like tech. Still, concerns remain about the long-term fiscal trajectory of the U.S. as President Trump's tax overhaul, projected to add $4 trillion to the deficit, moves to the Senate. With inflation still elevated and fiscal discipline lacking, many investors expect longer-dated yields to remain high.
Looking Ahead
Investors now focus a packed week of economic data and corporate earnings. Nvidia’s earnings on Wednesday will be a critical test for the AI trade that has helped fuel market gains in 2024 and 2025. Meanwhile, Fed officials are expected to reiterate a steady stance on interest rates, though market participants will parse their comments for any shift in tone. With geopolitical tensions and fiscal policy both in flux, the rally could be tested in the days ahead, but for now, the market is embracing the tariff reprieve and signs of consumer resilience.