Wall Street rallies on signs of easing trade tensions and a surprising consumer mood boost

U.S. stocks surged on Tuesday, driven by renewed investor appetite for risk following a surprising pause in trade threats from President Donald Trump and a sharp uptick in consumer confidence.

All three major U.S. indexes closed higher, with the tech-heavy Nasdaq leading the charge, boosted by strong performance from the so-called "Magnificent Seven" — a group of AI-focused tech giants fueling market momentum.

The S&P 500 edged within 3.6% of its all-time closing high from February, recovering from an 18.9% dip largely caused by Trump's unpredictable tariff announcements that rattled markets during much of his second term.

Trump Hits the Brakes on EU Tariffs

The market welcomed the news that Trump had postponed a proposed 50% tariff on European Union imports until July 9. This delay opens the door to renewed negotiations between the White House and the 27-member bloc, prompting Brussels to begin preparations for potential talks.

Consumers Deliver a Confidence Boost

Markets received an added lift from a striking 14.4% jump in consumer confidence this month, which overshadowed disappointing data on core capital goods orders — typically a barometer of future corporate investment plans.

Fed Sees No Red Flags — Yet

Richmond Federal Reserve President Thomas Barkin noted that current economic indicators show no signs of rising inflation or job losses. His remarks align with broader Fed sentiment: policymakers are inclined to keep interest rates steady until the full impact of Trump's trade policies becomes clear.

All eyes on the Fed while long-term yields fall in sync with Japan's bond surge

Investors are holding their breath ahead of Wednesday's release of the Federal Reserve's latest meeting minutes. Market participants hope for clues about the central bank's next steps on interest rates and inflation policy.

Meanwhile, U.S. Treasury yields declined, with the 30-year bond yield seeing its sharpest single-day drop since late April. This move mirrored a notable surge in long-dated Japanese government bonds, highlighting global bond market volatility.

U.S. Market Index Summary

• Dow Jones Industrial Average (DJI)

Gained +740.58 points (+1.78%)Closed at: 42,343.65

• S&P 500 (SPX)

Gained +118.72 points (+2.05%)Closed at: 5,921.54

• Nasdaq Composite (IXIC)

Gained +461.96 points (+2.47%)Closed at: 19,199.16

All 11 sectors of the S&P 500 ended the day in positive territory.Top performers: Consumer Discretionary and Technology sectors.

High-Flyers: Airlines, Tech Giants, and Semis Take the Lead

Mega-cap tech stocks and airline shares were among the top gainers of the day, as investors continued pouring money into growth-driven sectors. Semiconductor companies also enjoyed solid momentum.

The chip sector was in focus ahead of Nvidia's much-anticipated earnings report. The AI market darling is expected to post a 43.5% year-over-year jump in earnings per share, along with a 66.2% rise in revenue.

PDD Takes a Hit After Disappointing Q1

However, not all earnings stories were bright. PDD Holdings — the parent of e-commerce platform Temu — plummeted 13.6% after reporting a 47% year-over-year drop in profit and failing to meet revenue expectations for the first quarter.

Some stocks bucked the market trend and slid lower on Tuesday

While Wall Street celebrated broad-based gains, a few stocks lagged behind significantly. Fair Isaac Corp (FICO) was the worst performer of the day, tumbling 11.3%. Shares of VeriSign, the internet infrastructure and domain security provider, dropped 3.6%. AutoZone, a key name in the auto parts retail sector, also stumbled, losing 3.4% by the closing bell.

Xiaomi Shines in Asia After Record Earnings Report

Over in Asia, Chinese electronics giant Xiaomi made headlines on Wednesday as its shares were set to open 2.3% higher following an upbeat earnings report. The company posted all-time high revenue and profit for the first quarter of 2025.

Xiaomi attributed its stellar results to a successful pivot toward higher-end products — from flagship smartphones to smart home appliances. The company's shift to premium offerings is proving to be a profitable move.

Shares were expected to open at 52.75 Hong Kong dollars, with investors showing confidence in the world's third-largest smartphone maker, which is also expanding into the electric vehicle market.