The stock market rallied on Tuesday after President Trump announced over the holiday weekend that he would delay the implementation of a proposed 50% tariff on the European Union. The Dow Jones Industrial Average surged 740.58 points, or 1.78%, to finish at 42,343.65, while the S&P 500 rose 2.05% to 5,921.54. Both indexes snapped four-day losing streaks.
The Nasdaq Composite jumped 2.47% to 19,199.16, with technology stocks leading the gains. President Trump stated on Sunday that he would push back the 50% levy deadline on the EU to July 9 following a request from Ursula von der Leyen, the president of the European Commission. The tariff, originally set to begin on June 1, aimed to toughen trade policies with the EU.
National Economic Council Director Kevin Hassett expressed optimism about the delay, noting that it provides more time to negotiate without the immediate pressure of impending tariffs. U.S. consumer confidence data released on Tuesday also showed improvement in May, driven by hopes of favorable trade agreements. Tesla shares popped about 7% after CEO Elon Musk announced that he would refocus his energies on his companies rather than politics.
Other tech giants also saw significant gains. Additionally, U.S. Steel shares advanced roughly 2% amid reports that Japan’s Nippon Steel is expected to finalize its acquisition at $55 per share. Stocks saw a broad rally to kick off the shortened trading week after the U.S. equities market was closed on Monday in honor of Memorial Day.
More than 90% of S&P 500 stocks traded higher, and small-cap stocks also saw gains, with the Russell 2000 climbing about 2.5%. The optimism came after a tough stretch on Wall Street last week when the Dow, S&P 500, and Nasdaq Composite each dropped more than 2% following Trump’s initial tariff proposal.
Stocks rally on tariff delay announcement
“It seems like the long holiday weekend built up momentum for today’s rebound,” said Dann Ryan, managing partner at Sincerus Advisory. “The trade tensions that flared have been temporarily eased again.”
Investors are now keeping an eye on upcoming earnings reports. Notably, key companies are scheduled to release their results later this week.
To date, more than 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 signs of easing trade tensions. Germany’s DAX 30 and France’s CAC 40 both reached new peaks, led by gains in various sectors.
Shares of movie theater companies surged on Tuesday following a strong Memorial Day weekend at the box office. AMC Entertainment Holdings soared 22%, IMAX Corp rose 3%, and Marcus Theatres’ parent company popped 10%. The weekend’s total box office haul reached $326 million, the highest for the holiday weekend ever, driven by releases such as “Mission: Impossible – The Final Reckoning” and “Lilo & Stitch.”
Rising yields could hamper gains for the stock market, warned Scott Chronert, U.S. equity strategist at Citi.
“Higher rates, from a discounting of future cash flows perspective, can limit where equity market valuations can go,” Chronert said. Morgan Stanley maintained an overweight rating on Apple, stating that its valuation already accounted for an increased duty. The firm noted that a 25% tariff on iPhone imports would not sufficiently incentivize Apple to move its production back to the U.S.
U.S. Steel shares rose about 2% with news that Japan’s Nippon Steel is expected to close its acquisition of the company for $55 per share.
The deal, initially blocked in January, involves a substantial investment from Nippon Steel and is expected to maintain U.S. Steel’s headquarters in Pittsburgh and ensure an American-led board. Trump Media & Technology Group shares fell 10% after the company announced plans to raise capital to purchase bitcoin. CEO Devin Nunes called bitcoin an “apex instrument of financial freedom” in his announcement.
