Stocks Rebound Strongly to End Losing Streak
Stock markets are recovering after the Memorial Day weekend following a pause on newly proposed tariffs against the European Union.
Quick overview
- The U.S. stock market surged on Tuesday after President Trump announced a hold on new tariffs to the EU, reversing previous declines.
- The Dow Jones rose by 1.78%, the S&P 500 increased by 2.05%, and the Nasdaq led with a 2.47% gain as negotiations on tariffs began.
- Despite the temporary reprieve, concerns remain about potential future tariffs and their impact on market stability.
- Investors should be cautious as the market remains fragile, with significant earnings reports from companies like Nvidia expected soon.
The U.S. stock market climbed rapidly on Tuesday evening after President Donald Trump announced a hold on new tariffs to the EU, marking a rebound from several days of decreases.
The Dow Jones jumped 1.78% on the first day of trading since the Memorial Day holiday. The S&P 500 index also climbed, gaining 2.05%.it was the Nasdaq that topped them all, though with a 2.47% increase on Tuesday. These increases are in response to the U.S and European Union starting to negotiate about tariffs, a discussion which began on Sunday but could not go into effect on the stock market until Tuesday.
The looming fear of more tariffs caused the stock market to decline on Friday, leading investors to bail on stocks when they heard that the United States would potentially charge 50% tariffs on goods from the European Union. These two strong trade partners clashed over the proposed tariffs that Trump recommended until Sunday, when Trump spoke to the president of the European Commission.
Should Investors Fear More Tariffs?
It looks like Trump is not done proposing new tariffs, even on close trading partners. The tariffs that Trump was going to levy against the EU have been placed on hold until July 9th. That gives hit markets a reprieve for now, but it also raises the question as to how many more of these proposed tariffs will shake the market in the coming weeks.
Investors might have thought that they would get a break from the instability of the market and the dread of new tariffs once the United States and China reached an agreement to hold off on new tariffs for 90 days. But even during that window when the stock market was climbing, these new tariffs have reared their head. They have been put on pause as well, but the stock market remains as unstable as ever.
It appears that Trump is going from one trading partner to another and stirring the hornet’s nest, and it could be that more tariff problems are not a matter of if but when.
Stock Market Outlook
The Nasdaq Composite with its tech-heavy stocks is definitely leading the indices, but it could turn around quickly over the rest of the week. Investors need to realize that the stock market is very fragile right now and that it would take very little to change its direction.
Coming up later today are Nvidia’s earnings, which will help pave the way for tech stocks for the next quarter. It is expected that the company will report about a 66% improvement in earnings despite significant hurdles in the Chinese market.
Several stocks showed significant gains that are likely to come down later today, like Tesla, which jumped nearly 7% on Tuesday. Investors should expect some retreat on those larger stock price increases.
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