US Stocks Surge on Trump's Trade Optimism and AI Investment Push

Overview

Stock markets climbed on Tuesday as President Donald Trump adopted a less aggressive tone on global trade, while speculation grew that his policies would boost Corporate America. The recent surge in bond yields eased, while the dollar remained steady.

Market Movements

* The S&P 500 gained 0.7%, led by a 1.7% rise in the Russell 2000 index of small-cap stocks.
* The Nasdaq 100 and Dow Jones Industrial Average rose 0.6% and 1%, respectively.
* The yield on 10-year Treasuries declined by five basis points to 4.58%.
* The Bloomberg Dollar Spot Index showed little change.
* Bitcoin gained 4.5%, while Ether rose 1.5%.

Key Catalysts

Positive Trade Outlook: Trump's tone on trade eased concerns, with expectations that he will announce a major investment initiative led by Softbank, OpenAI, and Oracle in artificial intelligence (AI). An ETF tracking AI companies hit a three-year high.

Small-Cap Benefit: Small-cap companies gained on the belief that they would benefit from Trump's protectionist policies.

Space and Electric Vehicle Shares: Executive orders by Trump boosted space-related stocks while pressuring electric vehicle makers.

Treasury Yields: Yields on Treasury bonds approached their lowest levels for the year due to less onerous tariffs and potentially lower oil prices.

Debt Ceiling Concerns: Experts anticipate more headlines and potential stress on short-term Treasury rates as the debt ceiling debate in Congress intensifies.

Corporate Highlights:

* Apple faced analyst downgrades due to soft iPhone sales.
* Charles Schwab reported strong results driven by record retail brokerage inflows.
* 3M expects profit growth this year amid its turnaround plan.
* D.R. Horton exceeded earnings estimates for the first quarter.
* MicroStrategy shareholders approved a significant expansion in Class A common shares to finance Bitcoin purchases.

Key Events This Week:

* Samsung Galaxy "Unpacked 2025" event showcasing new flagship phones
* Eurozone consumer confidence data
* US jobless claims
* Bank of Japan policy meeting
* Eurozone and US manufacturing and services PMI releases
* US University of Michigan consumer sentiment, existing home sales, and S&P Global Manufacturing & Services PMI data