The United States stock market began the week with a strong rebound, reversing recent declines as investors welcomed signs of thawing trade tensions between Washington and Brussels.
The Dow Jones Industrial Average surged 741 points, or 1.8%, while the S&P 500 rose by 2.05%, marking its best single-day performance in more than two weeks. The Nasdaq Composite led the major indices with a 2.47% gain, driven by strong performances in technology shares, including Tesla, which climbed 7%.
The rally came after President Trump, over the Memorial Day weekend, announced he would delay imposing a 50% tariff on EU imports until 9 July. The tariff hike, originally scheduled for 1 June, had triggered concerns about an escalating trade conflict that could weigh on global economic growth.
According to a White House statement, the decision to postpone came following a phone call with European Commission President Ursula von der Leyen. The European Union confirmed that it would accelerate trade negotiations in response. EU trade chief Maroš Šefčovič emphasised the importance of avoiding the "mutual pain of tariffs."
“The market is relieved for now that they can ignore the latest tariff threat,” said Eric Sterner, chief investment officer at Apollon Wealth Management. “We just need to get past this uncertainty so companies and consumers can plan ahead.”
Global Market Impact
The easing of transatlantic tensions had an immediate ripple effect across global financial markets. The dollar strengthened during Tuesday trading, while government bond yields fell amid a broad rally in the global bond market.
European markets also posted gains. Germany’s DAX index reached an all-time high, reflecting improved investor sentiment following the announcement of resumed trade talks.
In Japan, long-dated government bonds rallied on speculation that the Japanese government might reduce its issuance of longer-term debt.
Commodities, however, painted a mixed picture. Oil prices edged lower, with West Texas Intermediate crude falling 1% to just under rs61 per barrel. Analysts cited concerns about potential supply increases from the OPEC+ group of oil-producing countries, which are due to meet later this week. Gold futures fell 1.9% amid the stronger dollar.
Technology and Corporate News
The technology sector was among the strongest performers on Tuesday. In addition to Tesla’s gains, investors are closely watching artificial intelligence chipmaker Nvidia, which is set to report quarterly earnings on Wednesday. Analysts expect Nvidia’s revenue from China to exceed $6 billion, despite recent US export restrictions on certain AI chips.
Elsewhere, 23andMe, a well-known player in consumer genetic testing, announced plans to delist from the Nasdaq and deregister with the US Securities and Exchange Commission. The move follows the sale of its core assets to Regeneron Pharmaceuticals for rs256 million after a bankruptcy auction.
Elon Musk’s brain-implant startup Neuralink also made headlines, reportedly raising $600 million in new funding at a $9 billion valuation, according to sources cited by news outlet Semaf
Political and Trade Developments
The tariff delay comes as US tariff revenues in May surpassed $22.3 billion, according to the US Treasury Department. A single-day deposit of over $16.5 billion was recorded on 22 May, underscoring the substantial financial impact of the administration’s trade policies.
Meanwhile, Taiwan pledged to increase imports of American goods, including energy and agricultural products, in response to the looming threat of a 32% US tariff. Taiwanese President Lai Ching-te expressed the island’s interest in participating in US-led industrial and technological initiatives.
Context
The Trump administration’s shifting trade strategy continues to influence global markets. Tariffs have become a primary tool in the President’s approach to renegotiating international economic relationships, with past threats and reversals frequently resulting in market volatility.
This latest development recalls earlier tariff tensions with China, which similarly saw sharp market swings tied to fluctuating policy signals. With key US economic indicators—such as durable goods orders and inflation data—set to be released this week, investors remain cautious.
Additionally, the Federal Reserve is expected to release minutes from its most recent policy meeting. Minneapolis Federal Reserve President Neel Kashkari has already indicated that policymakers should wait for greater clarity on trade developments before making further moves.
As global markets digest this week's events, investors will be watching closely for further signs of progress in the resumed US-EU trade discussions and whether the current reprieve from tariffs leads to a lasting agreement.
