The Dow Jones surged 600 points and has now gained 2,000 points from the lows of March 14. The S&P 500 gained 1.8%, while the Nasdaq, led by big tech, ended with gains of 2.2%.
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.
“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 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.”
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.”
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.
“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.”
(With Inputs From Agencies.)