US stocks climb on hopes for less aggressive tariffs

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Tech stocks led a rebound on Wall Street on Monday amid rising optimism that Donald Trump’s impending tariffs will be less aggressive than feared.

The blue-chip S&P 500 jumped 1.8 per cent, while the tech-heavy Nasdaq Composite rallied 2.3 per cent. Tesla, which has tumbled in recent weeks as Big Tech stocks have come under heavy pressure, soared nearly 12 per cent.

Monday’s gains come after the S&P last week snapped a four-week losing streak and are the latest sign that a period of marked underperformance for US stocks this year may be easing. 

Analysts said sentiment had been boosted by reports over the weekend that the White House was considering watering down some of the tariffs expected to take effect on April 2, dubbed “Liberation Day” by Trump. The president said on Friday that there would be “flexibility” in his plans to apply reciprocal tariffs to US trading partners.

“I think this ultra bearishness on the US and the end of US exceptionalism theme is a little overcooked,” said Brad Bechtel, an analyst at Jefferies. “We knew this was going to be a noisy process and the noise has created a lot of bearishness. [But] that bearishness will not last and the positive vibes can come back.”

Better than expected US manufacturing and services sector data, released on Monday morning, provided investors with further encouragement.

S&P Global’s flash US composite purchasing managers’ index rose to a three-month high of 53.5. Any reading above 50 suggests that most businesses are reporting growth in activity. Expansion in the US’s services sector accounted for the rise, with manufacturing activity contracting.

Hope that “regularisation and rationalisation of tariff policy is coming” was driving the gains, said Thierry Wizman, global foreign exchange and rates strategist at Macquarie.

US government bonds fell sharply on Monday as stocks climbed, with the 10-year Treasury yield, which moves inversely to prices, rising 0.09 percentage points to 4.34 per cent. The dollar rose 0.2 per cent against a basket of six other major currencies.

Stocks held their gains after Trump said the US would impose a 25 per cent tariff

on all imports from any country that buys oil or gas from Venezuela.

European stocks were relatively subdued. The region-wide Stoxx Europe 600 fell 0.1 per cent and Germany’s Dax closed 0.2 per cent lower. London’s FTSE 100 was flat. 

Investors have rotated out of US equities this year after Trump outlined plans to radically reorientate trade policy and gave Elon Musk licence, as head of the so-called Department of Government Efficiency, to find potential savings across the federal government.