Stock market today: S&P 500 rallies on consumer confidence, Trump EU tariff delay

The S&P 500 surged as U.S. consumer confidence rebounded sharply in May, exceeding expectations and ending a five-month decline, fueled by optimism over economic conditions and the U.S.-China trade deal. The Dow rose 1.8%, the S&P 500 gained 2.1%, and the NASDAQ advanced 2.5%, with tech stocks leading the rally, particularly Nvidia ahead of its earnings report. Sentiment was further boosted by President Trump's postponement of proposed tariffs on EU goods until July, though concerns remain about the unpredictability of trade policies, underscored by a slump in durable goods orders.

Analysis

U.S. equity markets experienced a significant rally, with the S&P 500 gaining 2.1%, the Dow Jones Industrial Average rising 1.8%, and the NASDAQ Composite advancing 2.5%, primarily driven by a sharp rebound in U.S. consumer confidence and President Trump's postponement of proposed steep trade tariffs on the European Union until July 9. The Conference Board's Consumer Confidence Index surged 12.3 points to 98.0 in May, its largest increase in four years and well above the anticipated 87.1, ending a five-month slump due to renewed economic optimism and the U.S.-China trade deal announced mid-month; this included a 17.4-point jump in the Expectations Index to 72.8. The technology sector led the market advance, with Nvidia (NVDA) rising over 3% ahead of its earnings, viewed as a bellwether for AI demand, and Tesla (TSLA) climbing over 6% after CEO Elon Musk affirmed his focus on the company. Other corporate news included Southwest Airlines (LUV) stock rising on new baggage fees and Salesforce (CRM) gaining on reports of a potential $8 billion acquisition of Informatica. Despite the positive conclusion to the earnings season, where nearly 78% of S&P 500 companies surpassed analyst expectations, underlying economic concerns persist, evidenced by a 6.3% slump in April's durable goods orders and ongoing unpredictability in trade policy, prompting calls from Federal Reserve officials like Neel Kashkari to pause rate adjustments.

Key Decisions for Investors

• Consider maintaining equity exposure, particularly in technology, given current market momentum and strong consumer confidence, but monitor Nvidia's (NVDA) upcoming earnings closely as a key AI demand indicator.
• Remain vigilant regarding the July 9 EU tariff deadline and upcoming Federal Reserve commentary, as trade policy unpredictability and mixed economic signals, such as the recent decline in durable goods orders, present potential downside risks.
• Evaluate specific corporate developments, such as Salesforce's (CRM) potential acquisition of Informatica (INFA) for strategic implications and valuation, and assess the revenue impact of Southwest Airlines' (LUV) new baggage fee policy.