On Monday, U.S. stocks surged, with the S&P 500 closing at its highest level in over two weeks. This was mainly driven by a strong rebound in tech stocks such as Nvidia and Tesla. Additionally, expectations of potentially milder tariff measures by the Trump administration boosted overall market sentiment.
According to media reports, the new round of tariffs that the U.S. was supposed to initiate on April 2 might undergo adjustments, with exemptions for certain specific industries. Although White House officials maintain that a final decision hasn't been made and the situation might change, investor sentiment has shown clear signs of easing.
The technology sector led the way in gains, with Nvidia rising over 3% and AMD surging 7%, propelling the Philadelphia Semiconductor Index (PHLX) up by 3%. Tesla's stock soared nearly 12%, marking its largest one-day gain since November last year and partially recovering from previous sharp declines. This momentum lifted the S&P 500 Index by approximately 4% from its March 13 low, though it still remains about 6% below its all-time high on February 19.
Sam Stovall, chief investment strategist at CFRA Research, noted that short-term market sentiment has improved, but investors remain cautious about the outlook. He stated, "The root of the current issues has not been resolved, and the uncertainty surrounding tariff policies could still impact economic growth, inflation levels, and corporate earnings."
Due to tariff uncertainty, many companies have already lowered their performance expectations for the coming quarters. Data from the London Stock Exchange Group (LSEG) shows that as of last Friday, earnings for S&P 500 constituent companies are expected to grow by 10.5% in 2025, down by 3.5 percentage points from earlier this year.
The small-cap index Russell 2000 rose by 2.55% to a two-week high. The market volatility indicator CBOE Volatility Index (VIX) fell by 1.8 points, hitting a one-month low, indicating a cooling in market risk aversion.
In terms of industry performance, ten out of the eleven sectors in the S&P 500 recorded gains, with the non-essential consumer sector leading the rise, up 4.07% thanks to Tesla's boost. The communication services sector followed closely, rising 2.1%.
Additionally, on the economic data front, recent surveys show that U.S. business activity rebounded in March. However, concerns over import tariffs and significant government spending cuts continue to intensify, affecting the market’s assessment of the economic outlook for the latter half of the year.
This week, the market's focus will shift to economic data, particularly the Federal Reserve's preferred measure of inflation—Personal Consumption Expenditures (PCE) Price Index, which is scheduled for release this Friday.
