Dow Jones, S&P 500, and Nasdaq Rally on Tariff Pause
The Dow Jones Industrial Average skyrocketed by more than 2,200 points, marking a 5.8% gain, after President Donald Trump announced a 90-day suspension on reciprocal tariffs affecting multiple countries. This development comes amid ongoing trade tensions with China and the European Union. Earlier in the day, the Dow had surged more than 2,400 points, reflecting investor optimism.
The S&P 500 climbed 6.9%, aiming to break a streak of four consecutive declines, while the Nasdaq Composite led the rally with an 8.7% spike, despite remaining below key technical moving averages. Meanwhile, the Russell 2000, tracking small-cap stocks, reversed early losses and jumped over 7%.
Federal Reserve Minutes Awaited
Investors are closely watching for the release of the Federal Reserve’s meeting minutes, scheduled for 2 p.m. ET. These notes are expected to offer insights into the Fed’s views on future interest rate cuts and the overall economic outlook.
Trump’s Reassurance Boosts Market Sentiment
President Trump posted on social media, expressing optimism:
“Everything is going to work out well… This is a great time to buy!”
This reassurance, paired with the tariff pause, helped bolster investor confidence.
Tech Stocks Lead Market Recovery
- Nvidia rebounded over 11%, recovering from recent losses, though it still trades below key averages.
- Tesla rose 6%, breaking a four-day downtrend but remains under its 50-day and 200-day moving averages.
- Apple gained over 10%, after recent declines had pushed it below Microsoft in market capitalization.
Late Tuesday, the White House emphasized Trump’s desire to bring iPhone manufacturing to the U.S., potentially impacting Apple’s supply chain in China.
Retail and Healthcare Stocks React
- Walmart surged 9%, retaking its 200-day moving average, despite uncertainty around import tariffs affecting nearly one-third of its sales.
- Analysts at Citi Research expect Walmart’s edge to remain, thanks to strong domestic sourcing.
On the healthcare front:
- UnitedHealth climbed over 10%, clearing a buy point of 553.91.
- Pfizer, Johnson & Johnson, and Merck initially dipped on news of incoming tariffs on pharmaceuticals, but all reversed higher by the afternoon.
Gold and Airline Stocks Shine
Gold stocks saw a strong rally:
- AngloGold Ashanti, Alamos Gold, and Gold Fields each rose 6-7%, bouncing above their 21-day moving averages.
- Harmony Gold soared nearly 10%.
Airline stocks also gained momentum. Delta Air Lines posted better-than-expected quarterly earnings, with $14 billion in sales and 46 cents per share in profit, beating FactSet’s estimate of 38 cents. Shares rose 6% despite the company withholding a full-year forecast due to economic uncertainty.
Trump Tariffs Spark Global Response
The U.S. implemented new tariffs at midnight, including 34% duties on Chinese imports, with another 50% added following China’s retaliatory measures. In response, China raised tariffs on U.S. goods to 84% and flagged several U.S. firms as unreliable.
The European Union also approved its first round of retaliatory tariffs, effective next week, signaling an escalation in the global trade war.
Outlook: Inflation Data and Bank Earnings Ahead
Investors are looking ahead to Thursday’s U.S. inflation report, expected to show a 0.1% monthly increase and a 2.6% year-over-year rise. Core inflation is projected to climb 0.3% month-over-month.
On Friday, major bank earnings reports are expected from JPMorgan Chase, Wells Fargo, Morgan Stanley, and BlackRock, setting the tone for the new earnings season.
