Linh Tran

The Dow Jones (US30) closed nearly 0.75% higher in yesterday’s session, marking its second consecutive gain and extending the recovery following last week’s technical pullback. The main driver behind this move was President Donald Trump’s decision to delay the imposition of tariffs on imports from the European Union, which helped ease fears of an escalating trade war—an issue that has recently caused significant volatility in global financial markets.

The tariff delay is seen as a strategic move, with the U.S. administration extending trade negotiations with the EU until July 9 instead of proceeding with the previously threatened 50% tariff.

This action not only reduces pressure on U.S. businesses with European supply chain exposure, but also creates a much-needed pause in tensions amid ongoing global economic uncertainty. For markets, this is a clearly positive signal that improves risk sentiment, encouraging capital to flow back into industrial and consumer stocks—two major sectors within the Dow Jones index.

Alongside the easing of policy-related risks, investor focus has now shifted to Nvidia’s earnings report, scheduled for release later today. As a market leader in artificial intelligence and semiconductors, Nvidia’s performance could have a strong spillover effect not just on the technology sector, but also on broader U.S. market sentiment, including the Dow Jones—which tends to correlate positively with speculative flows during bullish phases. A better-than-expected report may further boost short-term upward momentum for the Dow.

In addition, data from the Conference Board showed that U.S. consumer confidence rose to 98 in May, well above expectations. This indicates that American consumers remain optimistic about income prospects and the economy, despite prolonged inflation and high interest rates. Rising consumer confidence often precedes increased household spending, which is a key driver of GDP growth in the quarters ahead.

With positive signals from trade policy and improved consumer sentiment, the Dow Jones could continue to extend its recovery in the short term.

However, to assess the outlook more comprehensively, investors should closely monitor other key economic data releases this week, including the revised Q1 GDP and the Core PCE Price Index—the Federal Reserve’s preferred measure of inflation.

These figures will play a crucial role in shaping interest rate expectations and monetary policy direction going forward. If the data show stable economic growth and further easing of price pressures, the Dow may maintain its upward trajectory. On the other hand, any indication that inflation remains persistent could raise the risk of a near-term correction.

Tran is Market Analyst at XS.com