Stock market rallies as Trump eases tariffs and Federal Reserve signals dovish stance

US equities experienced a surge last week as concerns over tariffs eased and the Federal Reserve hinted at possible rate cuts, leading to a positive investor sentiment. The US Tech 100 saw a notable 6.43% increase, while the benchmark US 500 also rose by 4.59%. Although these gains were significant, the US 500 still lags by 10% compared to its peak in February.

President Trump’s recent actions regarding tariffs were indicative of a softer stance, as he hinted at potentially reducing tariffs on China from 145% to a range of 50-65%. Despite China disputing these claims, reports suggested that China quietly decreased tariffs, including a notable reduction in taxes on US semiconductors. Furthermore, progress on trade negotiations with Japan, Korea, and India were reported by the White House, which could serve as blueprints for future trade agreements.

In addition to positive trade developments, Fed Governor Christopher Waller also hinted at the possibility of interest rate cuts should the economy show signs of significant weakness. Waller mentioned that while he wouldn’t hastily react to inflation spikes due to tariffs, a substantial decline in the labor market could prompt the Fed to consider rate adjustments.

Overall, the market took these signals positively, leading to a rise in US equities. The more accommodating stance by both President Trump and the Federal Reserve provided investors with a sense of confidence, resulting in an uptick in trading activity. The market will continue to monitor economic data and key earnings reports in the coming weeks to assess the impact of recent developments on market performance.

The week ahead will be crucial for US equities, as investors will closely watch for any further developments in trade negotiations and any key economic indicators that could influence market sentiment. The potential for rate cuts by the Federal Reserve adds an element of uncertainty but also demonstrates a commitment to supporting the economy in the face of challenges. As always, it is essential for investors to stay informed, assess risks carefully, and make well-informed trading decisions in a dynamic market environment such as this.