Wall Street bets the worst of Trump's trade war is behind it
Tuesday's rally came after the S&P 500 finished its worst week since the early-April Trump tariff announcements.
Wall Street is betting that the worst of President Trump's trade war is in the rearview mirror.
The latest example came Tuesday, when news of easing trade tensions between the U.S. and the EU powered a 2% increase in the S&P 500. It was the largest single-day gain since May 12, when a rollback of tariffs between the U.S. and China spurred an even larger market rally.
While corporate earnings and bond-market jitters have prompted stock swings in recent weeks, trade policy remains the key driver of day-to-day market action. Investors have eagerly greeted any signs of easing tensions by driving markets higher, hopeful that the U.S. will eventually be able to strike deals with little lasting damage to the economy or corporate profits.
Few think the trade tensions have dissipated, or won't spark near-term stock declines going forward. But many said the worst fears of U.S. restrictions permanently reordering global trade have moderated, and the economic blow is unlikely to be as damaging as it appeared when Trump announced sweeping tariffs on April 2.
'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."
Tuesday's bounce came just days after the S&P finished its worst week since the original Trump tariff announcements in early April. On Friday, Trump threatened to impose a 50% rate on the European Union within days and warned Apple that foreign-made iPhones could face significant levies. That helped push major indexes into the red by more than 2% for the week.
Then, after a weekend phone call with European Commission President Ursula von der Leyen, Trump said he would delay the introduction of new EU tariffs until July 9. The EU said it would fast-track talks with the U.S.; the president posted on social media that the EU had called to set the date.
Markets reacted swiftly to the news: The Dow Jones Industrial Average climbed 741 points, or 1.8%. The Nasdaq Composite led gains, jumping 2.5%. Benchmark 10-year Treasury yields dropped to 4.432%, driven lower by a global bond rally, while the dollar strengthened.
The on-again, off-again dance of tariff talks and tentative deals has kept investors on edge, with hopes now rising that last week's threats were more a negotiating tactic than a sign of a renewed trade war. The Trump administration's 90-day pause on global tariffs is set to expire in July.
Investors were also buoyed by a pair of upbeat economic-data reports Tuesday: Consumer confidence rebounded in May, the Conference Board reported, and demand for durable goods dropped less sharply in April than economists expected.
In the coming days, a cluster of S&P 500 companies are set to report earnings, including artificial-intelligence heavyweight Nvidia on Wednesday. Investors will be parsing reports and remarks from company leaders for clues on the impact of trade tensions.
Major indexes have recovered losses since the president's unveiling of sweeping new tariffs on April 2 sent stocks tumbling. Still, some money managers are growing concerned that the optimism fuelled by the market's rebound is now too widespread.
Stock valuations are still relatively high, by historical standards: Companies in the S&P 500 are trading at 21 times their expected earnings over the next 12 months, as of Friday's close, versus a 10-year average of 18.7 times.
Some investors say high equity valuations are at odds with a number of uncertainties still clouding analysts' outlook, primarily the yet-to-be-determined fallout of the Trump administration's approach to trade.
'Those aren't matching right now," said Keith Buchanan, senior portfolio manager at Atlanta-based Globalt Investments. 'Sentiment has bounced back—it may prove to be somewhat premature."
Write to Hannah Erin Lang at hannaherin.lang@wsj.com
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
India.com
38 minutes ago
- India.com
Pakistan finally breaks silence over US strikes on Iran nuclear sites, leaves everyone in shock, says...
New Delhi: America's entry in the war between Israel and Iran has increased the stir in the Middle East. America carried out rapid attacks on three major nuclear bases of Iran. Meanwhile, Pakistan has strongly condemned the US attack on Iran's nuclear bases. Pakistan's Foreign Ministry posted on its official social media account that America has violated all the rules of international law by carrying out airstrikes. Under the United Nations Charter, Iran has full right to defend itself. The statement said that we have expressed deep concern about the current tense situation in the Middle East. The situation arising from this is very worrying because it will have dire effects in the Middle East and beyond. These attacks are a violation of international law and Iran has full right to defend itself. Let us tell you that Pakistan shares its border with Iran. Pakistan shares a 900 km long border with Iran. Pakistan had also called upon Israel and Iran to end this war as soon as possible. Pakistan had said that diplomacy is the only way to peace, not military conflict. Pakistan had lobbied for the Nobel Prize for Trump Pakistan had lobbied for the Nobel Peace Prize for US President Donald Trump a day earlier. The Pakistan government had formally proposed Trump's name for the 2026 Nobel Peace Prize. The Pakistan government had said that the way Trump resolved the war with India in 2025 through diplomatic intervention and important leadership, it has been decided to propose Trump's name for the Nobel Peace Prize. The neighbouring country had said that it was because of Trump's efforts that a ceasefire took place between India and Pakistan, which averted the major threat of war. For this reason, Trump is the most deserving of the Nobel Peace Prize. After the Pahalgam terrorist attack, Islamabad started Operation Bunyan Un Marsoos in response to India's Operation Sindoor.
Time of India
an hour ago
- Time of India
India-Canada diplomatic reset boosts student confidence
Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Popular in NRI 1. Harvard and Trump administration resume talks to resolve ongoing feud Reset in diplomatic relations between India and Canada has restored confidence among Indian students and parents, with most study-abroad platforms expecting a 20-30% increase in admissions in Canadian colleges this latest improvement in bilateral ties comes as a huge relief for students who had to stall their Canada study plans for more than a year. It also marks a blessing for those who had shortlisted the US as their only overseas study option but were forced to consider other destinations due to stricter visa and immigration rules adopted by the Donald Trump administration earlier this Sharma, a Delhi-based student, who had deferred her Fall 2024 offer from the University of Toronto due to visa uncertainty is now busy packing her bags. 'Following the improved bilateral climate, she reactivated her application and is now headed to study Computer Science this Fall,' said Adarsh Khandelwal, co-founder, Collegify, a study-abroad platform that helped with the admission.'Since the easing of tensions, we have observed a 31% increase in active Canadian applications for the Fall 2025 intake,' said permit approvals for Canada from India plunged 42% to 131,000 in 2023 from 226,000 in the year before, according to IRCC/Immigration, Refugees And Citizenship Canada/ data. Approvals fell a further 31% in Q1 2025 to 30,640 permits but experts predict a recovery in the coming Group, a study-abroad consulting firm, saw a 10-12% drop in Indian students' interest in Canadian academic institutions due to the diplomatic standoff, said founder Sanjay Laul.'There's a growing sense that it's getting harder to navigate the visa process for the US. Even students with strong academic profiles are facing unpredictability,' said Laul, adding that the current scenario is turning Canada a more attractive destination for Indian visa policies introduced by Canada and tighter measures taken by the Trump government especially on limiting foreign student enrolment had cast a cloud of doubt and uncertainty, according to Atul Verma, co-founder, Masterclass Space.'The signal of improving diplomatic ties between India and Canada comes as a welcome whiff of fresh air,' he current trends are all positive as there is an increase in student confidence and positive sentiment, noted Piyush Kumar, regional director, South Asia, IDP Education.'Canada has consistently remained a preferred destination, and this renewed engagement will contribute positively to students' plans for future intake,' said said IDP continues to see strong interest from Indian students in traditional English-speaking countries like Canada, the US, the UK and Australia.
Time of India
an hour ago
- Time of India
World Bank and IMF climate snub 'worrying', says COP29 presidency
The hosts of the most recent UN climate talks are worried international lenders are retreating from their commitments to help boost funding for developing countries' response to global warming. Major development banks have agreed to boost climate spending and are seen as crucial in the effort to dramatically increase finance to help poorer countries build resilience to impacts and invest in renewable energy. But anxiety has grown as the Trump administration has slashed foreign aid and discouraged US-based development lenders such as the World Bank and the International Monetary Fund from focussing on climate finance. Developing nations, excluding China, will need an estimated $1.3 trillion a year by 2035 in financial assistance to transition to renewable energy and climate-proof their economies from increasing weather extremes. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Buy Brass Laxmi Ji Idol For Wealth, Peace & Happiness Luxeartisanship Shop Now Undo Nowhere near this amount has been committed. At last year's UN COP29 summit in Azerbaijan, rich nations agreed to increase climate finance to $300 billion a year by 2035, an amount decried as woefully inadequate. Azerbaijan and Brazil, which is hosting this year's COP30 conference, have launched an initiative to reduce the shortfall, with the expectation of "significant" contributions from international lenders. But so far only two -- the African Development Bank and the Inter-American Development Bank -- have responded to a call to engage the initiative with ideas, said COP29 president Mukhtar Babayev. "We call on their shareholders to urgently help us to address these concerns," he told climate negotiators at a high-level summit in the German city of Bonn this week. "We fear that a complex and volatile global environment is distracting" many of those expected to play a big role in bridging the climate finance gap , he added. - A 'worrisome trend' - His team travelled to Washington in April for the IMF and World Bank's spring meetings hoping to find the same enthusiasm for climate lending they had encountered a year earlier. But instead they found institutions "very much reluctant now to talk about climate at all", said Azerbaijan's top climate negotiator Yalchin Rafiyev. This was a "worrisome trend", he said, given expectations these lenders would extend the finance needed in the absence of other sources. "They're very much needed," he said. The World Bank is directing 45 percent of its total lending to climate, as part of an action plan in place until June 2026, with the public portion of that spilt 50/50 between emissions reductions and building resilience. The United States, the World Bank's biggest shareholder, has pushed in a different direction. On the sidelines of the April spring meetings, US Treasury Secretary Scott Bessent urged the bank to focus on "dependable technologies" rather than "distortionary climate finance targets." This could mean investing in gas and other fossil fuel-based energy production, he said. Under the Paris Agreement, wealthy developed countries -- those most responsible for global warming to date -- are obliged to pay climate finance to poorer nations. Other countries, most notably China, make voluntary contributions. - Money matters - Finance is a source of long-running tensions at UN climate negotiations. Donors have consistently failed to deliver on past finance pledges, and have committed well below what experts agree developing nations need to cope with the climate crisis. The issue flared up again this week in Bonn, with nations at odds over whether to debate financial commitments from rich countries during the formal meetings. European nations have also pared back their foreign aid spending in recent months, raising fears that budgets for climate finance could also face a haircut. At COP29, multilateral development banks (MDBs) led by the World Bank Group estimated they could provide $120 billion annually in climate financing to low and middle income countries, and mobilise another $65 billion from the private sector by 2030. Their estimate for high income countries was $50 billion, with another $65 billion mobilised from the private sector. Rob Moore, of policy think tank E3G, said these lenders are the largest providers of international public finance to developing countries. "Whilst they are facing difficult political headwinds in some quarters, they would be doing both themselves and their clients a disservice by disengaging on climate change," he said. The World Bank in particular has done "a huge amount of work" to align its lending with global climate goals. "If they choose to step back this would be at their own detriment, and other banks like the regionally based MDBs would likely play a bigger role in shaping the economy of the future," he said. The World Bank declined to comment on the record.
