James Bodner and Chris Lagana, two traders, are seen working on the floor of the New York Stock Exchange on Tuesday, June 3, 2025. The photo was taken by Richard Drew for the Associated Press.
U.S. stock markets surged again on Tuesday, pulling closer to their record highs. Investors remained cautious but hopeful as they waited for updates on trade negotiations and how tariffs might impact the economy.
The S&P 500 climbed 0.6%, continuing its impressive rebound since falling nearly 20% two months ago. It's now just 2.8% below its peak. Meanwhile, the Dow Jones Industrial Average added 214 points (0.5%) and the Nasdaq composite rose by 0.8%.
Among the biggest movers, Dollar General shares soared 15.8%. The discount retailer posted better-than-expected earnings and raised its full-year forecast. However, the company warned that ongoing trade tensions and tariffs could affect customer behaviour and future results.
Many companies are struggling to forecast future earnings due to the unpredictable nature of tariff policies. The Organization for Economic Cooperation and Development (OECD) downgraded its U.S. economic growth estimate for 2025 to 1.6%, down from 2.8% last year.
Despite this, the damage to the broader economy has been mild so far. While some manufacturers have started to feel the strain, job cuts remain low, and inflation has stayed in check. A report released Tuesday showed a stronger-than-expected number of job openings in April, reinforcing the strength of the U.S. labour market. All eyes now turn to Friday’s employment report for a clearer picture of hiring activity in May.
On the trade front, investors remain optimistic that President Donald Trump will reach agreements that reduce tariffs—especially with China. There were reports he might speak with Chinese President Xi Jinping this week, though Chinese officials haven’t confirmed that.
Wall Street’s steady recovery comes after a sharp drop in April. The markets have almost fully rebounded, fueled by expectations of trade progress and solid job data.
However, some experts caution that this calm might not last. According to Jason Draho, head of asset allocation at UBS, it may take an unexpected policy shift or surprising inflation data to shake up the markets.
Technology stocks were a key driver of Tuesday’s gains. Nvidia climbed 2.9% and Broadcom rose 3.3%, recovering earlier losses driven by fears that chipmakers’ stock values were inflated.
At the close, the S&P 500 rose 34.43 points to finish at 5,970.37. The Dow ended at 42,519.64, up 214.16 points, while the Nasdaq added 156.34 to settle at 19,398.96.
In the bond market, Treasury yields were mostly unchanged. The 10-year yield ticked slightly down to 4.45% from Monday’s 4.46%. Despite Tuesday’s small dip, yields have climbed significantly over the last two months, partly due to fears of rising national debt from tax cuts.
Higher yields can make borrowing more expensive and often lead investors to shy away from pricey stocks.
Overseas markets also saw modest gains across Europe and Asia. A standout was Hong Kong, where the Hang Seng Index jumped 1.5%, despite a slowdown in Chinese factory output in May.
South Korea’s markets were closed due to a special presidential election. Opposition leader Lee Jae-myung won the race after the former president, Yoon Suk Yeol, was removed from office. Yoon now faces a high-profile trial over rebellion charges linked to his brief declaration of martial law last December.
