TLDR
- Wall Street sees early signs of recovery as Trump administration signals April 2 tariffs may be narrower than feared
- Tech stocks led a market rebound with the Nasdaq Composite rising 2.27% after four weeks of losses
- Investors are returning to Big Tech based on reset valuations and ongoing AI innovation potential
- Market experts remain cautious, warning this may be temporary relief rather than a sustained recovery
- Some analysts predict more volatility ahead despite the current rally, with concerns about earnings estimates
Tech Stocks Bounce Back as Tariff Fears Ease
The stock market showed signs of recovery on Monday as investors rushed back into technology stocks following hints that President Trump’s upcoming tariffs might be less severe than previously thought. The Nasdaq Composite jumped 2.27% to close at 18,188.59, while the S&P 500 also finished higher, continuing gains that helped it break a multi-week losing streak last Friday.
This sudden market turnaround comes after four weeks of losses that coincided with Wall Street’s reaction to Trump’s global trade remake plans. Investors are now hoping that “Liberation Day” might arrive earlier than the scheduled April 2 tariff implementation date.
The recent market boost stems largely from White House officials indicating that the next round of tariffs will be more targeted than the president’s initial statements suggested. Several reports have noted the levies will focus on specific countries – roughly 15% of nations – that have ongoing trade imbalances with the US.
Big Tech Leads the Charge
Big Tech stocks led the charge in Monday’s rally. Meta jumped 3.79%, Amazon rose 3.59%, and Nvidia gained 3.15%, while Google parent Alphabet increased by 2.21%.
These gains reflect a renewed interest in the major tech companies that had recently fallen out of favor. The shock of DeepSeek’s success combined with concerns about increasing investment costs without clear returns had started to unravel the AI trade in recent weeks.
The talk of high tariffs had added fuel to this tech selloff. But the prospect of a more limited tariff approach has changed market sentiment, making beaten-down stock prices look like buying chances for many traders.
“If you can wait out the trough, why not buy AI stocks on sale?” seems to be the reasoning for many investors jumping back in. The tech giants still offer a wide moat around their businesses, steady revenue streams, and are seen as essential rather than optional.
Mark Hackett, chief market strategist at Nationwide, warns against too much optimism too soon. “V-shaped recoveries are rare, and sustained stabilization typically requires a period of sideways movement before confidence can fully return,” he notes.
Experts Urge Caution
Other experts share this caution. David Zervos at Jeffries sees long-term potential but acknowledges short-term uncertainty. Technical strategist Craig Johnson from Piper Sandler believes stocks have “more potential to continue the relief rally from correction territory.”
However, Larry McDonald, editor of The Bear Traps Report, points to a disconnect between market reality and Wall Street’s earlier optimism.
“The problem is the Street just spent the last 90 days upselling us on animal spirits and high-octane Trump-driven growth. They’re trapped,” McDonald explains.
This gap is evident in earnings estimates. While markets have experienced major upheaval in recent months, full-year S&P 500 earnings per-share estimates remain around $270, barely changed from earlier projections.
McDonald believes the actual earnings might end up closer to $230 per share. If true, stocks would still be expensive even after the recent selloff.
Technical analyst Ari Wald from Oppenheimer expects stocks to climb into the summer but warns of more volatility later this year. He sees resistance becoming “more formidable” around the 5,900 mark for the S&P 500.
Signs of Continued Volatility
Doug Ramsey of the Leuthold Group takes an even more cautious view. He believes the S&P 500’s February 12 record close will turn out to be the high point for this bull market, potentially creating problems for consumer confidence and the broader economy.
“If the cyclical uptrend in stocks is broken, it’s difficult to see how an economic expansion with so many ‘pre-recessionary’ characteristics can possibly survive,” Ramsey warns.
For now, investors are enjoying the relief that comes with easing tariff worries. The next phase of the tech trade appears to be building on reset expectations, more reasonable valuations, ongoing revenue growth, and renewed energy around AI innovation.
But as everyone from poets to market strategists remind us, nothing lasts forever. The current rally may prove to be a temporary respite rather than the start of a sustained recovery, especially with so much uncertainty still coming from Washington regarding trade policy.
Monday’s trading saw the Dow Jones Industrial Average rise 1.42%. Tesla was among the day’s biggest winners with a jump of 11.93%, though futures were little changed Tuesday morning.
The CBOE Volatility Index, often called the market’s fear gauge, declined as optimism returned to riskier assets like technology stocks. This helped boost the Roundhill Magnificent Seven exchange-traded fund as well.
Wall Street’s enthusiasm may be driven partly by hopes that once the tariff uncertainty passes, attention can return to the parts of the Republican agenda – tax cuts and deregulation – that the market was celebrating after the election.
For the moment, many companies have felt the negative effects of tariff threats without seeing any benefits from promised Republican policies. Several major businesses across industries from airlines to retailers have issued profit warnings.
The coming weeks will be crucial as investors watch for clearer signals about the actual scope of the April 2 tariffs. Many analysts believe the market won’t fully stabilize until there’s concrete information rather than hints and reports.
As former Soviet leader Vladimir Lenin once said, quoted by Larry McDonald: “There are decades where nothing happens; and there are weeks where decades happen.” For Wall Street, the next few weeks may prove to be the latter.
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