S&P 500 Rises as Nvidia and Tesla Jump - Is the Rally for Real?

The stock market surged Monday, with the S&P 500 up 1.76%, led by gains in Nvidia (NVDA) and Tesla (TSLA). The Nasdaq rose 2.27%, while the Dow climbed 1.42%.

Is this rally built on solid ground or just another short-term bounce?

Tech Stocks and Tariff Headlines

The gains came amid speculation that the U.S. might ease trade tariffs. Trump hinted at possible exemptions for some countries, though he provided no details—a classic market-moving soundbite without substance. Despite the lack of concrete policy shifts, investors jumped back into beaten-down tech stocks.

• Nvidia shares rose more than 3% and AMD shares jumped 7%, leading the PHLX Semiconductor Index (SOX) to rise 3%.
• Tesla skyrocketed nearly 12%, its biggest one-day gain since November, likely due more to short covering than any fundamental shift in its business.

Economic Data: Useful or Market Noise?

A modest uptick in U.S. business activity (S&P Global Composite PMI rose to 53.5 from 51.6) helped spark optimism. However, businesses are still citing concerns over tariffs and government spending cuts, making this data point far from conclusive.

Key Market Movers

• Lockheed Martin fell over 1% after BofA Global Research downgraded it - not exactly a major market-moving event, but enough to grab headlines.
• Crypto stocks surged as Bitcoin climbed 4%, pushing MicroStrategy up 10% and Coinbase up 7% - though crypto’s volatility makes these gains suspect.
• Dun & Bradstreet gained 3% after a $7.7 billion acquisition deal with Clearlake Capital. But considering private equity’s track record, this deal could go either way.

Ten of the eleven S&P 500 sector indexes ended higher, led by Consumer discretionary stocks (+4.07%), primarily thanks to Tesla’s short-term pop. Communication services stocks (+2.1%), but with no clear driver beyond overall market momentum.

Rally or Trap? What Comes Next

Despite Monday’s gains, the S&P 500 remains 6% below its February 19 record high. The real test comes Friday with the Personal Consumption Expenditures (PCE) index report, the Federal Reserve’s preferred inflation gauge. If inflation surprises to the upside, this rally could work out quickly.

"Investors are relieved but remain skeptical about how long this rally will last," said Sam Stovall, Chief Investment Strategist at CFRA Research. "Tariffs and inflation concerns haven’t disappeared." And given that earnings estimates for 2025 have already been revised down 3.5 percentage points this year, optimism might be misplaced.

Bottom Line

Tech stocks and tariff speculation drove Monday’s rally, but the underlying issues—tariffs, inflation, and slowing earnings growth - haven’t changed. Without real policy shifts or better economic data, this could be just another short-lived bounce before the next downturn.