US STOCKS-US stocks end sharply higher on Trump's tariff reprieve

By Stephen Culp

NEW YORK, May 27 (Reuters) - Wall Street surged on Tuesday as investor risk appetite was buoyed by U.S. President Donald Trump's latest tariff respite and an unexpected jump in consumer confidence.

A broad rally sent all three major U.S. stock indexes higher, with strength in the AI-related "magnificent seven" group of momentum stocks putting the tech-laden Nasdaq out front.

The S&P 500 is now within 5% of its record closing high reached on February 19, having plunged as much as 18.9% below that level in the wake of Donald Trump's erratic tariff announcements, which have whipsawed markets for much of the President's second term.

"When (Trump) came out with guns blazing April 2, the market thought the world was ending," said Paul Nolte, senior wealth adviser and market strategist at Murphy and Sylvest in Elmhurst, Illinois. "The selloff was so strong and quick that you would expect some rebound, and the rebound has been so sharp and quick that you would expect some type of pullback as investors digest it and ask themselves what the terrain really looks like."

In the latest move, the president backed down from his 50% tariff threat against the European Union, delaying its implementation until July 9 to allow for negotiations between the White House and the 27-nation bloc.

"Investors have kind of figured Trump out a little bit," Nolte added. "He's like the poker player at the table that you know is making some bets and then when pressed by the other players at the table, he folds."

On the economic front, a 14.4% surge in current-month consumer confidence added momentum to the rally, helping investors look past a steeper-than-expected drop in new orders for core capital goods, considered a barometer of U.S. corporate spending plans.

Richmond Federal Reserve President Thomas Barkin told Bloomberg that economic data has yet to show increased price pressure or joblessness, echoing the sentiments of many Fed officials who anticipate the key interest rate will remain unchanged until the full effect of Trump's tariffs is known.

Minutes from the U.S. Federal Reserve's most recent monetary policy meeting are due on Wednesday.

Long-dated U.S. Treasury yields dipped, while those on the 30-year note US30YT=RR were set for their biggest one-day fall since late April, mimicking a steep price rally in longer-term Japanese debt.

According to preliminary data, the S&P 500 .SPX gained 118.93 points, or 2.05%, to end at 5,921.75 points, while the Nasdaq Composite .IXIC gained 460.64 points, or 2.46%, to 19,197.85. The Dow Jones Industrial Average .DJI rose 738.18 points, or 1.77%, to 42,341.25.

All 11 major sectors of the S&P 500 were green.

Airlines .SPCOMAIR and megacap tech-related growth stocks .NYFANG were the clear outperformers.

Semiconductors .SOX were also ahead of the pack, one day before chipmaker Nvidia NVDA.O is due to report its quarterly results. Year-on-year, the AI darling is expected to post a 43.5% jump in earnings per share, on a 66.2% revenue surge.

Temu-parent PDD Holdings PDD.O dropped after reporting a 47% fall in first-quarter profit and missed quarterly revenue estimates.