Stocks climbed Tuesday after President Donald Trump said he was resetting a deadline for imposing tariffs on the European Union.
The broad S&P 500 closed just over 2%, its biggest jump in more than two weeks, while the Dow Jones Industrial Average gained 740 points, or about 1.8%. The tech-heavy Nasdaq was up nearly 2.5%.
Meanwhile, the yield, or the percentage return demanded by investors, on the 10 year U.S. Treasury note declined to 4.45% after hovering at or above 4.5% for much of last week — a sign of increased interest in lending to the government.
Global investors also increased demand for government bonds around the world, including U.S. Treasuries, after Reuters reported that Japanese officials were considering borrowing less money than budget hawks had feared.
Trump's decision to delay a deadline on European Union trade talks lifted sentiment, even as he has shown a willingness to upend his trade policies on the fly. On Sunday, Trump posted on his Truth Social platform he had restored the date he would impose fresh tariffs on the E.U. to the previous deadline of July 9. Two days earlier, Trump threatened to hit the region with a 50% across-the-board tariff June 1, citing stalled trade negotiations.
The E.U.’s trade chief, Maros Sefcovic, spoke with Commerce Secretary Howard Lutnick and said they "continue to stay in constant contact," according to a post on X.
Trump's latest E.U. tariff warning, plus a threat to impose a 25% tariff on tech giants like Apple for smartphones produced abroad, sent markets into reverse after a steady period of overall gains in recent weeks.
Heading into Tuesday, the S&P 500 was down about 1.3% this year.
Some analysts said Trump's E.U. post Friday was likely a negotiating tactic — but that it nevertheless signaled that see-saw markets movements are likely to be a permanent feature of the president's second administration.
"At this stage, we are not inclined to change our working assumption that tariffs on the EU will ultimately settle around 10%," analysts with Capital Economics consultancy wrote in a note to clients Friday after Trump's tariff salvo, "but this underlines that there are risks and that the road to an agreement could be rocky."
While Trump’s "most bombastic tariff threats (including the ones Fri morning) won’t become a reality," he has still "imposed substantial import taxes in just the last four months, and his administration is probably not finished," said Adam Crisafulli of Vital Knowledge market media commentary.
This week, traders will get additional snapshots of the economy and corporate landscape when the Bureau of Economic Analysis reports the Federal Reserve's preferred measure of inflation, the personal consumption index. Several retailers as well as chipmaker Nvidia, which has been fueling the artificial intelligence boom, will report earnings Wednesday.
