Wall Street showed signs of stability on Tuesday after an energetic rally the day before, fueled by growing optimism that President Donald Trump’s proposed tariffs might not be as severe or widespread as initially feared. The S&P 500 edged up by 0.1% in early trading, following Monday’s strong 1.8% surge. The Dow Jones Industrial Average gained 58 points, or 0.1%, while the Nasdaq composite also added 0.1%, reflecting cautious optimism across the markets.
The recent upswing comes after a period of turbulence that saw U.S. stocks plunge into correction territory — a decline of more than 10% from recent highs — marking the first such downturn since 2023. The sell-off made stocks appear more attractively priced, addressing concerns that valuations had become inflated after years of rapid growth.
Despite the rebound, many analysts warn that more volatility is likely. The market’s next big test is the looming April 2 deadline for Trump’s new “reciprocal” tariffs, a move the president calls “Liberation Day.” The tariffs are intended to counterbalance what Trump perceives as unfair trade practices by key U.S. partners. While Monday’s market rally was driven by speculation that the tariffs might end up being more selective and less economically damaging than feared, uncertainty continues to hang over investors.
Even if the tariffs turn out to be more measured, the constant back-and-forth in public discourse has already taken a toll on confidence among both consumers and businesses. Many fear that this erosion of trust could lead to spending cuts, business slowdowns, and ultimately a drag on the economy. A key consumer confidence report due later Tuesday is widely expected to show a decline, further reflecting the cautious mood among Americans.
So far, however, the broader economy and job market have shown resilience. Job creation remains steady, and key economic indicators haven’t yet signaled a significant slowdown — though economists warn that this could change if uncertainty continues to weigh on sentiment.
On the corporate front, several major companies struggled despite the broader market’s stability. Homebuilder KB Home saw its stock drop 6.6% after reporting weaker-than-expected profits and revenue for the latest quarter. Already grappling with a sluggish housing market, homebuilders now face the additional challenge of potential cost increases due to tariffs, which could push home prices even higher and dampen buyer demand.
McCormick, the global spice and seasoning giant, also saw its shares sink, falling 4.2% after posting disappointing earnings. The company pointed to the "current uncertainty of the consumer and macro environment" as a major factor dragging on performance — a sign that even well-established consumer goods companies aren’t immune to the broader economic unease.
Tesla, a frequent lightning rod for market attention, experienced a volatile session. The electric vehicle maker swung between small gains and losses before ending down 0.5%. Fresh data from the European Automobile Manufacturers Association painted a grim picture: Tesla’s European sales plummeted nearly 50% in the first two months of the year compared to the same period in 2024, even as the broader market for electric vehicles continued to grow.
The decline is being attributed to several factors, including Tesla’s aging model lineup and intensifying competition from Chinese electric vehicle manufacturers like BYD, which are expanding aggressively into global markets. However, the company’s struggles are also being linked to CEO Elon Musk’s increasingly controversial public behavior. Musk’s vocal endorsement of Germany’s far-right party in last month’s national election, his embrace of fringe political figures, and a widely criticized gesture during a Trump event — which many interpreted as a Nazi salute — have sparked backlash, particularly in Europe, where Tesla’s reputation appears to be taking a serious hit.
International markets were mixed but largely positive. European stock indexes rose, encouraged by hopes that the worst of the tariff fears might be overblown, while Asian markets ended the day with a more uneven performance.
In the bond market, Treasury yields remained relatively stable. The yield on the 10-year Treasury note dipped slightly to 4.33% from 4.34% late Monday, reflecting a cautious but steady outlook among fixed-income investors.
As markets navigate this volatile landscape, attention now turns to upcoming economic data releases and any new developments around the tariff situation. Investors remain hopeful that cooler heads will prevail and that the worst-case trade war scenarios can be avoided — but with Trump’s April 2 deadline fast approaching, uncertainty continues to cast a long shadow over Wall Street’s fragile recovery.
