Wall Street rebounded on Tuesday (Wednesday AEST), as traders returned after a long weekend, buoyed by news that United States President Donald Trump agreed to delay a planned 50% tariff on the European Union.
The Dow Jones Industrial Average climbed 740.6 points, or 1.8%, to close at 42,343.7. The S&P 500 rose by 2.1%, gaining 118.7 points to 5,921.5, while the Nasdaq Composite surged 462.0 points or 2.5% to 19,199.2.
Markets reacted positively to Trump’s announcement over the holiday weekend that he would postpone the implementation of the EU tariffs until 9 July.
The move followed a request from European Commission President Ursula von der Leyen and came just days after Trump initially proposed the import levy to take effect on 1 June.
Tech stocks led the rally. Tesla shares jumped 6.9% after CEO Elon Musk stated he would shift his focus back to his companies and away from politics.
Other major technology names also climbed, with AMD up 3.9%, Apple gaining 2.5%, Microsoft adding 2.3%, and Nvidia gaining 3.2% ahead of its highly anticipated quarterly results.
Elsewhere, U.S. Steel rose by 2% after sources cited by CNBC said Japan’s Nippon Steel is on track to complete its US$55-per-share acquisition of the company.
Economic data also supported the market’s advance. U.S. consumer confidence in May came in stronger than expected, improving after five consecutive months of decline amid optimism around potential trade agreements.
The sharp rise in equities follows a tough week for investors. All three major indices had dropped more than 2% last week, weighed down by concerns over the proposed EU tariffs and their impact on global trade.
Investors are now turning their attention to corporate earnings. Identity management firm Okta is set to report after Tuesday’s close, with Nvidia, Macy’s and Costco scheduled to announce results later in the week.
In the bond market, yields moved lower across the curve. The benchmark 10-year Treasury yield fell by 1.4% to 4.448%, while the 2-year yield dipped 0.4% to 3.977%.
