Wall Street surged on Tuesday as investor risk appetite was buoyed by U.S. President Donald Trump’s latest tariff respite and an unexpected jump in consumer confidence. The TSX added to its gains from Monday, when U.S. markets were closed.
A broad rally sent all three major U.S. stock indexes higher, with strength in the AI-related “magnificent seven” group of momentum stocks putting the tech-laden Nasdaq out front.
The S&P 500 is now within 3.6% of its record closing high reached on February 19, having plunged as much as 18.9% below that level in the wake of Donald Trump’s erratic tariff announcements, which have whipsawed markets for much of the President’s second term.
“When (Trump) came out with guns blazing April 2, the market thought the world was ending,” said Paul Nolte, senior wealth adviser and market strategist at Murphy and Sylvest in Elmhurst, Illinois. “The selloff was so strong and quick that you would expect some rebound, and the rebound has been so sharp and quick that you would expect some type of pullback as investors digest it and ask themselves what the terrain really looks like.”
In the latest move, the president over the weekend backed down from his 50% tariff threat against the European Union, delaying its implementation until July 9 to allow for negotiations between the White House and the 27-nation bloc. The move prompted Brussels to prepare for trade negotiations.
“Investors have kind of figured Trump out a little bit,” Nolte added. “He’s like the poker player at the table that you know is making some bets and then when pressed by the other players at the table, he folds.”
On the economic front, a 14.4% surge in current-month U.S. consumer confidence added momentum to the rally, helping investors look past a steeper-than-expected drop in new orders for core capital goods, considered a barometer of U.S. corporate spending plans.
Richmond Federal Reserve President Thomas Barkin told Bloomberg that economic data has yet to show increased price pressure or joblessness, echoing the sentiments of many Fed officials who anticipate the key interest rate will remain unchanged until the full effect of Trump’s tariffs is known.
Minutes from the U.S. Federal Reserve’s most recent monetary policy meeting are due on Wednesday.
Long-dated U.S. Treasury yields dipped, while those on the 30-year note were set for their biggest one-day fall since late April, mimicking a steep price rally in longer-term Japanese debt. The Canadian 10-year yield traded 7.4 basis points lower at 3.255%, tracking a downshift in U.S. yields.
The Dow Jones Industrial Average rose 740.58 points, or 1.78%, to 42,343.65, the S&P 500 gained 118.72 points, or 2.05%, to 5,921.54 and the Nasdaq Composite gained 461.96 points, or 2.47%, to 19,199.16.
The S&P/TSX composite index ended up 195.87 points, or 0.8%, at 26,269.00, eclipsing the closing record high it posted on Monday.
The real estate sector climbed 2.6%, led by a gain of 14.8% for the shares of InterRent Real Estate Investment Trust after the company announced a deal to be acquired and as long-term borrowing costs declined.
Consumer staples were another standout in Toronto, adding 2.2% and heavily weighted financials were up 1%.
Bank of Nova Scotia missed quarterly earnings estimates, burdened by a larger than expected sum of money put aside to shield against bad loans in a challenging environment riddled with trade uncertainties. Still, its shares ended 1.6% higher.
The materials sector was the only one of ten major TSX sectors to end lower, falling 0.2%, as gold gave back some of its recent gains.
All 11 major sectors of the S&P 500 advanced on the day, with consumer discretionary and tech shares leading the gainers. Airlines and megacap tech-related growth stocks were the clear outperformers.
Semiconductors were also ahead of the pack in the U.S., one day before chipmaker Nvidia is due to report its quarterly results. Year-on-year, the AI darling is expected to post a 43.5% jump in earnings per share, on a 66.2% revenue surge.
Temu-parent PDD Holdings dropped 13.6% after reporting a 47% fall in first-quarter profit and missed quarterly revenue estimates.
Lagging shares were Fair Isaac Corp, down 11.3%, VeriSign, Inc, down 3.6%, and Autozone Inc, lower by 3.4%.
Advancing issues outnumbered decliners by a 5.42-to-1 ratio on the NYSE. There were 222 new highs and 27 new lows on the NYSE. On the Nasdaq, 3,206 stocks rose and 1,264 fell as advancing issues outnumbered decliners by a 2.54-to-1 ratio. The S&P 500 posted 24 new 52-week highs and no new lows while the Nasdaq Composite recorded 87 new highs and 63 new lows. Volume on U.S. exchanges was 16.98 billion shares, compared with the 17.72 billion average for the full session over the last 20 trading days.
Reuters, Globe staff