U.S. stocks rose on Monday as the Trump administration exempted smartphones, computers and various electronics from China from tariffs.
The Dow Jones Industrial Average rose 312 points, or 0.78%. The S&P 500 rose 0.79%. The tech-heavy Nasdaq Composite rose 0.64%.
All three major indexes closed higher after a volatile trading day. The indexes opened higher in early trading but later gave up some of their gains as gains in technology stocks faded. The Nasdaq rose as much as 2.4% in early trading, turned mixed at midday, and then gradually recovered. The Dow and S&P 500 fell briefly at midday before recovering somewhat in the afternoon.
U.S. stock index futures rose over the weekend after investors realized on Saturday that the Trump administration had issued tariff exemptions for electronics imported from China, according to a notice from U.S. Customs and Border Protection late Friday.
The exemptions came after President Donald Trump imposed a 145% tariff on Chinese imports on Wednesday, and then the United States announced the exemptions. However, the exemptions do not apply to the 20% tariffs on Chinese imports due to China’s role in the fentanyl trade. Apple Inc. (AAPL) shares rose 2.2% on Monday.
Despite the stock market gains, concerns about a trade war with China linger: U.S. Commerce Secretary Howard Lutnick said Sunday that the exemptions for electronics are only temporary. Lutnick said those products will face separate tariffs.
“(Electronics) are not subject to the reciprocal tariffs, but they are included in the semiconductor tariffs, which may be implemented in a month or two,” Lutnick told ABC News on Sunday.
In another back-and-forth negotiation, Trump said Monday he was considering short-term tariff exemptions for automakers. Trump’s 25% tariffs on cars took effect April 3, and tariffs on auto parts are not expected to take effect until May 3. Ford Motor (F), Stellantis (STLA) and General Motors (GM) all surged more than 3% after Trump’s comments.
“I’m looking at some measures to help some of the car companies that are switching to parts made in Canada, Mexico and other places, and they need more time. They’ll make them domestically, but it’ll take more time,” Trump said in a speech at the White House.
The rise in U.S. stocks closely followed gains in overseas stocks. In Europe, the benchmark Stoxx 600 index rose 2.7% and Germany’s DAX rose 2.85%. In Asia, Japan’s Nikkei 225 rose 1.2% and Hong Kong’s Hang Seng rose 2.4%. Taiwan’s benchmark index fell slightly by 0.08%, standing out against the backdrop of a generally rising stock market.
The rise in U.S. stocks on Monday was also helped by the latest survey data released by the New York Federal Reserve, which showed that consumers were increasingly pessimistic about the short-term economic outlook. The New York Federal Reserve’s survey on Monday showed that respondents’ near-term inflation expectations rose sharply, up 0.5 percentage points to 3.6%, the highest level in a year and a half.
The U.S. stock market has just experienced a crazy two weeks. Trump’s introduction of so-called “reciprocal tariffs” and subsequent announcement of a 90-day suspension of most “reciprocal” tariffs has caused the U.S. stock market to experience a roller coaster-like fluctuation.
The S&P 500 fell 9% in the first week of April, its worst week since 2020, before rising 5.7% in the second week of April, its best week since 2023. Stocks posted their third-biggest one-day gain in modern history on Wednesday, after Trump announced a 90-day suspension of most “reciprocal” tariffs. Despite the sharp gains, the S&P 500 is still trading below its close on April 2, before Trump first announced the reciprocal tariffs.
“Since the announcement of ‘Liberation Day’ less than two weeks ago, the situation has remained volatile and developments have been up and down,” UBS analysts said in a note on Monday. “But given the 90-day suspension of ‘reciprocal’ tariffs and the latest electronics tariff exemptions, we expect the recovery in technology stocks to continue.”
Tariffs dampen Wall Street’s outlook for the economy
Wall Street is expected to extend its gains despite lingering uncertainty. The lack of clarity over Trump’s trade policy has left traders in the dark about how to best allocate their investments and has raised concerns about U.S. economic growth.
“While any delay in tariffs would have a marginal benefit, it is not the same as removing them,” Morgan Stanley analysts said in a note on Friday. “History shows that persistent uncertainty weighs on business confidence, which in turn weighs on business spending and hiring.”
Goldman CEO David Solomon said in an earnings press release on Monday that the current operating environment is “significantly different” than earlier this year.
“With growing signs that economic activity is slowing, the odds of a recession have increased,” Solomon said on a call with analysts. “Our clients, including CEOs and institutional investors, are concerned about the significant uncertainty in the short and long term, which is limiting their ability to make important decisions.”
Billionaire Ray Dalio said over the weekend that Trump’s tariffs have pushed the U.S. to the brink of a recession, or even “something worse.”
“Right now, we are at a decision point where a recession is very close,” the hedge fund manager told NBC News on Sunday. “If it’s not handled well, I’m concerned about something worse than a recession.”
Citi analysts cut their year-end target for the S&P 500 to 5,800 from 6,500 on Friday, joining Wall Street giants in cutting their forecasts for corporate earnings and growth this year amid an uncertain tariff environment.
“There’s no doubt that the optimism we had going into the year has given way to extreme uncertainty,” Citi analysts said in a note on Friday.
Investors’ focus this week has been on the Treasury market, which saw unusually volatile moves last week that spooked the White House and raised questions about whether Treasuries are losing their safe haven status.
Treasury prices rose slightly on Monday, relatively stable after broad losses last week. The 10-year Treasury yield hovered around 4.38% Monday morning after surging above 4.5% on Friday. Yields move in the opposite direction to bond prices.
The dollar index, which measures the greenback’s strength against six foreign currencies, fell 0.4% on Monday, posting its biggest weekly drop since 2022. The dollar has weakened across the board this year amid concerns about waning investor confidence in the U.S.
U.S. crude futures rose 3 cents to $61.53 a barrel on Monday. Brent crude futures, the global benchmark, rose 12 cents to $64.88 a barrel. Oil prices were largely steady after OPEC slightly cut its forecast for global oil demand growth this year in its monthly report, citing the impact of tariffs.
Meanwhile, gold prices fell 0.8% on Monday after breaking through an all-time high of $3,200 an ounce on Friday. Gold prices have surged more than 21% this year as investors flock to safe-haven assets. Goldman Sachs analysts raised their year-end gold price forecast to $3,700 on Friday, highlighting rising demand for the metal amid economic uncertainty.
