Stocks Rise on Tech Tariff Pause as Dollar Weakens: Markets Wrap

Stocks rose, powered by a rally in tech stocks, after President Donald Trump signaled a carve-out of trade levies on some consumer electronics, fueling speculation that they might avoid the worst of the tariff hit.

S&P 500 futures added 1.4% and European stocks jumped more than 2%. Apple Inc. gained about 5% in premarket trading. US bonds retraced some of last week’s losses, pushing 10-year yields down to 4.43%. Gold slipped and oil climbed. The dollar fell for a fifth day as Trump warned that a specific levy for electronics will be announced later.

While the possibility of a softer policy toward technology companies was enough to lift shares, which have been some of the hardest hit this year, Wall Street strategists continued to warn clients about the troubles ahead. Citigroup Inc.’s Beata Manthey cut her view on US equities, and Morgan Stanley lowered its outlook for earnings.

“Consumer electronics is one of the largest portions of total imports from China to the US and will ease considerably the impact on companies like Apple,” said Derek Halpenny at MUFG. “But this will hardly help restore investor confidence much and the angst in the markets last week over confidence in the US Treasury bond market and the dollar is likely to continue.”

The late-Friday reprieve — exempting a range of popular electronics from the 145% tariffs on China and a 10% flat rate around the globe — is temporary and a part of the longstanding plan to apply a different, specific levy to the sector, the White House said. Still, a pause in the duties indicates a willingness by Trump to compromise on a deal, according to some analysts.

“The good news from last week is that Trump has a pain threshold and equity markets can impose some constraints around his policies,” said Aneeka Gupta, head of macroeconomic research at Wisdom Tree UK Ltd. “This is likely to become more apparent in the second half of the year, forcing Trump to back down on further tariffs. We are still early in the cycle, there is long way to go with the tariff battle.”

While the greenback struggled, yen optimism is spreading among hedge funds and asset managers as US tariffs drive haven demand at a time when traders are reassessing the Bank of Japan’s interest rate hike path. The yen appreciated as much as 0.9% to levels last seen in September.

Meanwhile, the euro is emerging as a prime beneficiary of greenback weakness as investors reassess the dollar’s role in the global financial system. Europe’s common currency gained 0.3% on Monday, adding to its fastest rally in a decade and a half.

“Some people believe that rule of law is being degraded in the US and your investment is not that safe in the US,” said Michael Kelly, head of global multi asset at PineBridge Investments. “That could over the long term temper the willingness to invest in the US.”

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Citigroup strategists led by Manthey wrote that cracks in “US exceptionalism” will persist with the emergence of China’s DeepSeek artificial intelligence model, Europe’s fiscal expansion and rising trade tensions that will hit American companies harder than peers in Japan and Europe. They downgraded US equities to neutral from overweight.

“The drivers of exceptionalism are fading, both from a gross domestic product and earnings-per-share perspective,” the strategists wrote. “The US market remains relatively expensive, while EPS downgrades are intensifying.”

At Morgan Stanley, Mike Wilson cut his 2025 earnings-per-share forecast to $257 from $271. “The 90-day pause on reciprocal tariffs and further concessions over the weekend lessen the near-term probability of a recession, but uncertainty remains high,” said Wilson, who sees the S&P 500 trading in a range from 5,000-5,500. The index finished last week at 5,363.36.

Elsewhere in commodities, oil steadied as traders weighed the latest US moves. Goldman Sachs Group Inc. said the global oil market faces “large surpluses” this year and next as the trade war weighs on demand.

“Extreme risk levels have fallen, but there is still no visibility on the end situation, and there is a risk that the twists and turns as countries try to negotiate will mean no end to volatility,” said Benjamin Melman, global chief investment officer at Edmond de Rothschild AM.

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