NEW YORK: Wall Street stocks climbed on Tuesday after US President Donald Trump stepped back from his threat to impose 50% tariffs on the European Union, easing trade tensions and boosting sentiment as markets reopened after the Memorial Day break.
On Sunday, Trump restored a July 9 tariff deadline to allow for talks between Washington and the 27-nation European bloc.
He had initially threatened EU tariffs on Friday, alongside announcements of higher levies on Apple’s iPhones.
“The threat of 50% tariffs on the EU is likely a negotiation tactic to force dialogue on difficult issues such as non-tariff barriers,” Glenmede analysts said in a note.
Asian and European markets were mixed after rising on Monday, although moves in US assets were more pronounced as traders returned after the long weekend.
At 11:22 a.m. ET, the Dow Jones Industrial Average rose 507.15 points, or 1.22%, to 42,111.45, the S&P 500 gained 91.87 points, or 1.58%, to 5,894.63, and the Nasdaq Composite added 373.75 points, or 2.00%, to 19,110.68.
Most megacap and growth stocks jumped with Nvidia, up 2.9%, leading gains. The AI bellwether is slated to report quarterly earnings after markets close on Wednesday.
All 11 S&P sub-sectors moved higher, with consumer discretionary and information technology being the biggest gainers.
Long-dated US Treasury yields dipped, while those on the 30-year note were set for their biggest one-day fall since mid-April, mimicking a steep price rally in longer-term Japanese debt.
In economic data, minutes from the US Federal Reserve’s last policy meeting are scheduled for release on Wednesday.
An index tracking consumer confidence rose to 98 in May, a Conference Board report showed. Economists polled by Reuters had expected the index to stand at 87.
A number of Fed officials are expected to speak through the week. Minneapolis Fed President Neel Kashkari on Tuesday called for holding interest rates steady until the impact of higher tariffs on inflation became clear.
Personal Consumption Expenditure data - the Fed’s favored inflation indicator - for May as well as a second estimate of first-quarter GDP are also scheduled to be released later this week.
Wall Street witnessed sharp weekly losses on Friday as worries about mounting US debt and Trump’s latest trade policy shakeup sparked a broad selloff. His sweeping tax bill - which is expected to substantially expand federal debt - won a crucial House vote last Thursday.
Equities have witnessed immense volatility since the start of the year, with the S&P 500 falling almost 19% in April from its February record highs. However, the benchmark is now about 4% away from its highs as easing trade concerns and tame inflation data spurred a risk-on rally.
The S&P 500 posted 18 new 52-week highs and no new lows, while the Nasdaq Composite recorded 73 new highs and 41 new lows.
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