Stocks rallied as traders snapped up battered tech shares, extending an advance driven by signs U.S. trade policies will be more targeted than anticipated, with President Donald Trump saying he may give a lot of countries breaks on tariffs. Bonds fell alongside gold. The dollar wavered.

Wall Street’s risk-on bid lifted shares of nearly all stripes — from small to big caps — in a rebound that followed a selloff from all-time highs that challenged the notion of US exceptionalism. The S&P 500 rose almost 2%. Tesla Inc. soared 12% to lead gains in megacaps. That’s after a slide that put the group of “Magnificent Seven” tech giants on track for its worst quarter since 2022. A closely watched gauge of chipmakers climbed 3%. The crypto world surged.

“Stocks look to continue to rally from oversold levels, and any reduction in potential tariff impacts will be an upward catalyst,” said Ivan Feinseth at Tigress Financial Partners. “I believe we have seen the worst of the market’s pullback, though we will continue to see increased volatility at the beginning of next month based on the outcome of President Trump’s tariff policies.”

Markets gripped by anxiety about an all-out trade war got relief from signs the coming wave of tariffs is shaping up as more focused than the sprawling, fully global effort Trump has otherwise mused about.

The president said his tariff rollout next week would focus on so-called reciprocal duties, featuring rates on a country-by-country basis corresponding to levies and other trade barriers on U.S. products. Trump twice on Monday signaled trading partners would receive possible exemptions or reductions.

The S&P 500 rose 1.8%. The Nasdaq 100 climbed 2.2%. The Dow Jones Industrial Average added 1.4%. A gauge of the Magnificent Seven megacaps gained 3.4%. The Russell 2000 advanced 2.5%.

The yield on 10-year Treasuries rose nine basis points to 4.33%. With improved risk sentiment, 16 issuers tapped the US high-yield market. Oil climbed as Trump said he would seek a 25% tariff on nations buying crude and gas from Venezuela.“We said last week that we had already seen ‘peak chaos’ in US tariff policy,” said Thierry Wizman at Macquarie. “Events over the weekend seemed to confirm that regularization and rationalization of tariff policy is coming, followed by negotiations and concessions.”

A growing chorus of central bankers and finance ministers around the world have expressed concern that a global trade war would inhibit economic growth and fuel inflation — a combination that would make it difficult to calibrate an effective interest-rate response.

“Yes, tariffs hurt the economy by complicating capex decisions about the future,” said Scott Wren at Wells Fargo Investment Institute. “But today the issue is mainly price increases, which we foresee as incremental and diluted. What’s more, the economy has slowed from 2024, but we think to a sustainable pace.”

Meantime, equity strategists from JPMorgan Chase & Co., Morgan Stanley and Evercore ISI are advising clients that the worst of the recent downturn is likely behind them.

“The U.S. equity pullback has put a dent in US outperformance over the rest of the world,” said BlackRock Investment Institute’s Strategists including Jean Boivin and Wei Li. “We stay overweight US stocks and see opportunities across global stocks.”

Last week’s lack of any major tariff news and a dovish outcome from the Federal Reserve helped bring buyers back into the market, according to Adam Turnquist at LPL Financial.

On Friday, the S&P 500 halted a stretch of four straight weeks of losses. Since 1928, Turnquist says the end of those streaks has sent the US benchmark gauge up 1.2%, 2.9%, and 4.6% over the subsequent one-, three-, and six-month periods, respectively.

Whether the rally can reassert itself will largely depend on earnings growth taking the baton from valuation expansion as the key driver of market performance, according to Christian Floro at Principal Asset Management.

“For gains to continue, earnings growth must take over — a transition that has historically extended market cycles,” he said. “While inflation and policy uncertainty risks remain, improving earnings breadth across sectors and industries and potential tailwinds from monetary and fiscal policy could provide support.”

Floro noted that earnings breadth is improving, with growth expanding beyond technology into more cyclical industries. Consensus expectations that project 10.2% earnings growth in 2025 also suggest a revival in bullish sentiment, he noted.

“Historical trends suggest that when earnings take the baton from valuations, markets can continue to climb,” Floro said. “Investors should closely watch earnings revisions and policy developments as key indicators for the path ahead.”