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Indexes rise: Dow 1.69%, S&P 500 2.01%, Nasdaq 2.45%

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Consumer confidence rebounds in May

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Temu-parent PDD Holdings ( PDD ) falls on quarterly revenue miss

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Nvidia ( NVDA ) gains ahead of quarterly earnings due on Wednesday

(Updates to afternoon)

By Stephen Culp

NEW YORK, May 27 (Reuters) - Wall Street surged on

Tuesday as investors returned from the three-day holiday weekend

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 tech shares, and in

particular the AI-related "magnificent seven" group of momentum

stocks putting the Nasdaq out front.

The S&P 500 is now 3.7% below 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

advisor & 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 were set for their biggest one-day fall

since late April, mimicking a steep price rally in longer-term

Japanese debt.

The Dow Jones Industrial Average rose 704.32 points,

or 1.69%, to 42,305.03, the S&P 500 gained 116.90 points,

or 2.01%, to 5,919.72 and the Nasdaq Composite

gained 458.62 points, or 2.45%, to 19,195.83.

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

consumer discretionary and tech shares

leading the gainers.

Airlines and megacap tech-related growth stocks

were the clear outperformers.

Semiconductors were also ahead of the pack, one day

before chipmaker Nvidia ( NVDA ) 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 ) dropped 15% after reporting

a 47% fall in first-quarter profit and missed quarterly revenue

estimates.

Advancing issues outnumbered decliners by a 5.35-to-1 ratio

on the NYSE. There were 197 new highs and 24 new lows on the

NYSE.

On the Nasdaq, 3,206 stocks rose and 1,196 fell as advancing

issues outnumbered decliners by a 2.68-to-1 ratio.

The S&P 500 posted 23 new 52-week highs and no new lows,

while the Nasdaq Composite recorded 79 new highs and 56 new

lows.