US stock markets make a comeback after 4-day losing streak

US stock markets came roaring back on Tuesday, snapping a four-day slide after President Donald Trump postponed a massive 50% tariff on European imports. The S&P 500 gained 2.05% to close at 5,921.54, bringing relief to a market that had been under pressure since last week.

The Dow Jones Industrial Average jumped 740.58 points, or 1.78%, ending at 42,343.65. The Nasdaq Composite climbed 2.47% to 19,199.16, boosted by strong moves in major tech names like Tesla and Nvidia.

The rally followed Trump’s announcement on Sunday that he had agreed to delay the proposed tariff until July 9. That decision came after a direct appeal from Ursula von der Leyen, the President of the European Commission. Trump had originally planned to roll out the 50% tariff on June 1, a move that had rattled investors.

Tech climbs as Musk walks away from politics

Tesla shares jumped by around 7% on Tuesday after CEO Elon Musk said he was stepping away from politics to focus more on running his companies. 

That headline alone drove a surge in risk appetite across the tech space. Investors piled into Nvidia, AMD, Apple, and Microsoft, pushing the Nasdaq to outperform the broader market.

Outside tech, US Steel advanced by roughly 2% after reports emerged that Nippon Steel, based in Japan, is expected to finalize its $55 per share acquisition deal. The broader rally wasn’t limited to large caps either. More than 90% of stocks in the S&P 500 finished higher.

Smaller companies also gained, with the Russell 2000 rising about 2.5%. Markets had been closed on Monday in observance of Memorial Day, but when trading resumed Tuesday, buying pressure overwhelmed selling across nearly every sector.

The tone completely reversed after last week’s rough patch, where all three major indexes — Dow, S&P 500, and Nasdaq — had each lost more than 2%. On CNBC’s “Squawk Box”, Kevin Hassett, Director of the National Economic Council, said he expected to “see a few more deals even this week,” adding fuel to investor confidence.

That followed the release of stronger-than-expected consumer confidence data for May, which lifted hopes for economic stability and more trade progress.

Investors track earnings, watch for catalysts

This week, investors are watching earnings reports to see if the rebound has legs. Okta was scheduled to report after the bell on Tuesday, while updates from Nvidia, Macy’s, and Costco are expected later in the week. FactSet reported that over 95% of S&P 500 companies have released earnings for this quarter, and nearly 78% of them exceeded expectations.

But some analysts are staying cautious. In a note sent out Sunday, Adam Parker, founder of Trivariate Research, wrote: “Right now, it feels like no one has a strong conviction — bullish or bearish — about the stock market. Fundamentals might deteriorate from here.” He added that the bigger concern remains Washington’s trade relationship with China.

“We tend to think, and many investors agree, that the only tariff-related conversation that really matters is what the US does with China,” Parker said. “Taking it all in, even if macro headwinds persist, there’s a growing view that S&P 500 earnings might end up being less impacted than many, including us, originally feared.”

Not everyone’s waiting for signs. Dann Ryan, Managing Partner at Sincerus Advisory, said Tuesday’s sharp moves were a result of pent-up momentum. “It seems like the long holiday weekend only served to build up momentum for today’s whipsaw,” Ryan said. “The trade tensions that had flared have already been extinguished, yet again, and now they’ll include an express lane.”

Outside the stock market, crypto investors had their own reason to celebrate. The crypto market cap has added about $1 trillion, a 42% increase since its April 8th low, and now sits near $3.4 trillion. That’s just 6% below its December 2024 peak.

Stripping out Bitcoin, the market still rose by $319 billion, or 35%. Even so, it’s about $380 billion short of the November 2021 top and $381 billion under the 2024 record. Bitcoin was worth $109,877 at the time of writing.

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