Stocks Power Risk-On Rally on Trump Tariff Signals: Markets Wrap

(Bloomberg) — Stocks saw one of their best sessions of the year, with the Nasdaq 100 adding 2.2%, amid signs US trade sanctions will be narrower than feared, including a suggestion by President Donald Trump that some countries will get breaks. Bonds fell alongside gold. The dollar wavered.

Wall Street’s risk-on bid lifted shares of nearly all stripes in a rebound from a sharp selloff that has challenged the notion of US exceptionalism. A gauge of the “Magnificent Seven” megacaps rallied the most in two months, with Tesla Inc. soaring 12% and Nvidia Corp. leading chipmakers higher. The advance trimmed a slide driven by concern over lofty valuations that put big techs on pace for their worst quarter since 2022.

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Markets gripped by anxiety about the economic impacts of an all-out trade war got relief from signs the coming wave of US tariffs is shaping up as more focused than the barrage Trump has occasionally threatened. The president twice on Monday signaled trading partners would receive possible exemptions or reductions.  

“Stocks look to continue to rally from oversold levels, and any reduction in potential tariff impacts will be an upward catalyst,” said Ivan Feinseth at Tigress Financial Partners. “I believe we have seen the worst of the market’s pullback, though we will continue to see increased volatility at the beginning of next month based on the outcome of President Trump’s tariff policies.”

The S&P 500 rose 1.8%. The Dow Jones Industrial Average added 1.4%. A measure of the Magnificent Seven megacaps gained 3.4%. A closely watched index of chipmakers jumped 3%. The Russell 2000 advanced 2.5%.

The crypto world rallied. The yield on 10-year Treasuries rose nine basis points to 4.33%. Oil climbed as Trump said he would seek a 25% tariff on nations buying crude and gas from Venezuela.

“We said last week that we had already seen ‘peak chaos’ in US tariff policy,” said Thierry Wizman at Macquarie. “Events over the weekend seemed to confirm that regularization and rationalization of tariff policy is coming, followed by negotiations and concessions.”

Trump has touted his April 2 announcement as a “Liberation Day,”, heralding the start of a more protectionist policy meant as retribution against trading partners he has long accused of “ripping off” the US. Nations in the crosshairs of US tariffs have rushed to set up meetings with Trump administration officials to offer concessions and other defensive responses in an effort to earn exceptions from the reciprocal tariffs.

A growing chorus of central bankers and finance ministers around the world have expressed concern that a global trade war would inhibit economic growth and fuel inflation — a combination that would make it difficult to calibrate an effective interest-rate response.

“Yes, tariffs hurt the economy by complicating capex decisions about the future,” said Scott Wren at Wells Fargo Investment Institute. “But today the issue is mainly price increases, which we foresee as incremental and diluted. What’s more, the economy has slowed from 2024, but we think to a sustainable pace.”

Meantime, equity strategists from JPMorgan Chase & Co., Morgan Stanley and Evercore ISI are advising clients that the worst of the recent downturn is likely behind them, citing metrics from investor sentiment and positioning to favorable seasonality.

“The US equity pullback has put a dent in US outperformance over the rest of the world,” said BlackRock Investment Institute’s Strategists including Jean Boivin and Wei Li. “We stay overweight US stocks and see opportunities across global stocks.”

Last week’s lack of any major tariff news and a dovish outcome from the Federal Reserve helped bring buyers back into the market, according to Adam Turnquist at LPL Financial.

On Friday, the S&P 500 halted a stretch of four straight weeks of losses. Since 1928, Turnquist says the end of those streaks has sent the US benchmark gauge up 1.2%, 2.9%, and 4.6% over the subsequent one-, three-, and six-month periods, respectively.

Whether the rally can reassert itself will largely depend on earnings growth taking the baton from valuation expansion as the key driver of market performance, according to Christian Floro at Principal Asset Management.

“For gains to continue, earnings growth must take over — a transition that has historically extended market cycles,” he said. “While inflation and policy uncertainty risks remain, improving earnings breadth across sectors and industries and potential tailwinds from monetary and fiscal policy could provide support.”

Floro noted that earnings breadth is improving, with growth expanding beyond technology into more cyclical industries. Consensus expectations that project 10.2% earnings growth in 2025 also suggest a revival in bullish sentiment, he noted.

“Historical trends suggest that when earnings take the baton from valuations, markets can continue to climb,” Floro said. “Investors should closely watch earnings revisions and policy developments as key indicators for the path ahead.”

Some of the main moves in markets:

Stocks

• The S&P 500 rose 1.8% as of 4 p.m. New York time
• The Nasdaq 100 rose 2.2%
• The Dow Jones Industrial Average rose 1.4%
• The MSCI World Index rose 1.3%
• Bloomberg Magnificent 7 Total Return Index rose 3.4%
• Philadelphia Stock Exchange Semiconductor Index rose 3%
• The Russell 2000 Index rose 2.5%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro fell 0.1% to $1.0802
• The British pound was little changed at $1.2922
• The Japanese yen fell 0.9% to 150.66 per dollar

Cryptocurrencies

• Bitcoin rose 3.7% to $88,249.07
• Ether rose 4.9% to $2,090.87

Bonds

• The yield on 10-year Treasuries advanced nine basis points to 4.33%
• Germany’s 10-year yield was little changed at 2.77%
• Britain’s 10-year yield was little changed at 4.71%

Commodities

• West Texas Intermediate crude rose 1.4% to $69.23 a barrel
• Spot gold fell 0.5% to $3,006.33 an ounce

–With assistance from Sujata Rao, Allegra Catelli and Catherine Bosley.

©2025 Bloomberg L.P.