A rally in US stocks Monday amid reports that President Trump’s tariffs will be less widespread than feared underscored how more clarity on the administration’s new policies remains the key to a market bounce-back.
The S&P 500 (^GSPC) rose more than 1.7% while the Dow Jones Industrial Average (^DJI) added about 1.4% or almost 600 points. The tech-heavy Nasdaq Composite (^IXIC) led the gains, rising nearly 2.3%. The market rally intensified after President Trump said Monday afternoon he may give “a lot of countries breaks” when it comes to reciprocal tariffs expected April 2.
Tariff uncertainty was a key catalyst for the stock market sell-off over the past month. Piper Sandler chief investment strategist Michael Kantrowitz told Yahoo Finance that he’d be watching for any clarity on those policies as the key turning point for the stock market’s drawdown to potentially bottom.
“Usually, [when] the primary catalyst that stops becoming a problem, essentially, that allows the market to find its footing,” Kantrowitz said.
Read more: The latest news and updates on Trump’s tariffs
Initially, investors had been waiting for April 2, the day Trump dubbed “Liberation Day,” for more information on tariffs. But weekend reports indicated that the Trump administration has narrowed its focus on the tit-for-tat duties to what it has called the “dirty 15” countries — which have an unfavorable trade balance with the US.
Treasury Secretary Scott Bessent told Fox Business last week, “It’s 15% of the countries, but it’s a huge amount of our trading volume.”
Fundstrat head of research Tom Lee wrote in a note to clients on Sunday night that markets appeared to be “setting up for a potential face-ripper rally this week as recent developments have eased several of the major fears that have weighed on equities since December.”
“Trade war concerns are easing, brightening market sentiment,” Lee wrote.
While Monday’s market action shows markets have been hoping Trump’s tariffs won’t be as widespread as once thought, some equity strategists believe investors likely need official announcements from the administration before the tariff uncertainty overhang on stocks is fully removed.
“This relief that we’re seeing is more a result of the fact that there was no sort of whiplash from the White House last week, and it seems like we’ve had more marginally positive news with respect to what tariffs might potentially look like on April 2nd,” Raymond James chief market strategist Matt Orton told Yahoo Finance Monday morning. “But I don’t know if there’s too much that we can put into that until we actually have certainty, until we’re actually past April 2nd.”
