Stocks saw an uptick in morning trading on Monday as Wall Street navigated through the uncertainties of a trade war.
The S&P 500 surged by 1.6%, bouncing back after its first positive week following a four-week losing streak.
The Dow Jones Industrial Average gained 533 points, or 1.3%, by 11:01 a.m. Eastern, while the Nasdaq composite rose by 2%.
Markets are continuing to focus on how tariffs may impact inflation, consumer spending, and overall economic growth. Stocks have fluctuated between optimism and concern as tariffs are proposed, enforced, or delayed. A new set of tariffs scheduled for April 2 could potentially be softened or postponed instead of being implemented.
Ulrike Hoffmann-Burchardi, chief investment officer of global equities at UBS Global Wealth Management, explained that the precise scope of the tariffs is still unclear, and there’s a possibility of continued back-and-forth escalation, which could lead to further market volatility in the coming weeks.
Monday’s gains were widespread, with over 85% of the stocks in the S&P 500 rising. Every sector in the index saw positive movement.
Technology stocks played a key role in driving the market’s gains. This sector, known for containing some of the most valuable companies on Wall Street, often has a significant impact on the overall market’s movements, whether positive or negative.
Nvidia rose 3.3%, and Apple gained 0.6%.
Tesla saw a 9.5% increase, though it’s still down about 30% for the year. The company has faced challenges amid concerns that customers are turned off by CEO Elon Musk’s efforts to reduce spending by the U.S. government.
Genetics testing firm 23andMe saw its stock drop by 50% after announcing that it had initiated voluntary bankruptcy proceedings over the weekend.
AZEK Co. surged 12.4% after revealing it would be acquired by Australia’s James Hardie Industries in a cash-and-stock deal valued at approximately $8.75 billion.
This marks the second major deal in the sector within a week. On Thursday, QXO Inc. announced its acquisition of Beacon Roofing Supply Inc. in a deal valued at approximately $11 billion, including debt.
In the bond market, Treasury yields climbed, with the 10-year Treasury yield rising to 4.32% from 4.25% on Friday.
Markets in Europe and Asia showed mixed results.
Chinese Premier Li Qiang adopted a more conciliatory approach during a meeting with business leaders and U.S. Senator Steve Daines, a staunch supporter of former President Donald Trump. Daines is the first U.S. lawmaker to visit Beijing since Trump took office.
Wall Street is anticipating several key economic updates this week. On Tuesday, The Conference Board will release its consumer confidence survey for March, which is expected to show a slight decline in confidence.
On Friday, the U.S. government will release the personal consumption expenditures (PCE) price index for February, a key inflation measure closely watched by the Federal Reserve.
Recent economic reports suggest that while the underlying economy remains strong, consumers are growing more cautious and concerned. The reports also indicate that inflation continues to be persistent.
Persistent inflation has led the Federal Reserve to proceed cautiously, initiating cuts to its benchmark interest rate at the end of 2024. These reductions followed a period of rate hikes aimed at taming inflation, which had reached a 20-year high.
Various inflation indicators show that rates are still above the Fed’s target of 2%. The ongoing trade tensions with major U.S. trading partners have raised concerns about inflation picking up again. As a result, the Fed is holding off on further rate cuts, waiting to see how inflation and the overall economy respond.
While lower interest rates can reduce borrowing costs and provide a boost to the economy, they can also contribute to higher inflation.
