Markets Soar as Trade War Truce Sparks Risk-On Frenzy

Wall Street bulls charge ahead as geopolitical tensions ease—proving once again that markets will rally on any excuse to ignore structural risks.

Traders pile into equities after tariff delay removes immediate threat to global supply chains. Because nothing fuels optimism like kicking the can down the road.

The real question? How long until the next tweet unravels the fragile peace—and which hedge funds positioned for chaos get caught flat-footed.

Consumer confidence rebound

Investor sentiment was further buoyed by a rebound in consumer confidence, which ROSE in May after five months of declines. Tuesday’s broad market rally saw more than 90% of S&P 500 components close higher. Small-cap stocks also gained, with the Russell 2000 up more than 2%.

The Optimism extended to the bond market, where U.S. Treasurys rallied and yields fell. The 10-year yield slipped to 4.43%, while the 30-year yield dropped to 4.94%. The dollar strengthened, and global bond markets responded positively to speculation that Japan will scale back long-term bond issuance after recent volatility.

Investors are now turning attention to a busy week of economic data and earnings. Minneapolis Fed President Neel Kashkari called for the central bank to hold interest rates steady amid ongoing trade uncertainty. 

Meanwhile, Nvidia is set to report quarterly results Wednesday, with Okta, Macy’s, and Costco also on deck.

Tuesday’s rally helped reverse last week’s losses, which were triggered by Trump’s initial tariff threats. Analysts say the back-and-forth has kept markets volatile but hopeful.