The stock market rallied on Tuesday as trade tensions between the U.S. and the European Union eased. President Trump announced over the holiday weekend that he would delay imposing a 50% tariff on EU goods until July 9. The tariffs were initially set to take effect on June 1.
The Dow Jones Industrial Average jumped 740.58 points, or 1.78%, to close at 42,343.65. The S&P 500 rose 2.05% to 5,921.54, while the Nasdaq Composite gained 2.47% to 19,199.16. Both the Dow and the S&P 500 snapped four-day losing streaks.
Technology stocks led the gains, with Tesla shares rising about 7% after CEO Elon Musk said he would shift his focus back to his company. Other tech giants also saw significant increases. The U.S. consumer confidence data for May, released on Tuesday, showed a positive sentiment and optimism about future trade agreements.
This boosted stocks across various sectors, resulting in a broad market rally. More than 90% of S&P 500-listed stocks traded higher during the session.
Trade tension relief boosts stocks
Movie theater stocks also performed well after the Memorial Day weekend, when the box office raked in a record $326 million. Shares of AMC soared 22%, Cinemark rose 3%, and Marcus Theatres’ parent company increased 10%. Small-cap stocks joined the rally, with the Russell 2000 index climbing about 2.5%.
International markets also climbed on Tuesday amid signs of easing trade tensions. Germany’s DAX index hit a new peak. Investors are now closely watching for any strong catalysts in the stock market.
Adam Parker, founder of Trivariate Research, noted a lack of strong bullish or bearish conviction about the market currently. Despite macro headwinds, there is a growing view that S&P 500 earnings might be less impacted than initially feared. This week, traders will be following earnings reports from major companies.
According to FactSet, more than 95% of S&P 500 companies have reported this earnings season, with almost 78% surpassing analyst expectations. Tuesday’s market rebound highlighted renewed investor optimism, supported by the delay in tariffs and strong performances across various sectors. The market will continue to monitor trade policies, consumer spending trends, and corporate earnings as indicators for future movement.
