Was it only Monday that the U.S. stock market was falling apart, the Dow Jones Industrial Average down 1,000 or more points, and economic nightmare just around the bend? Indeed it was, and yet, two straight days of strongly rebounding markets seem to have erased that nightmare from investors' minds, at the same time as it erased losses from their portfolios, and sent stock market averages charging deeply into "the green."

In late morning trading Wednesday, 10:55 a.m., the Dow is solidly higher with a 2.6% gain, while the broader S&P 500 and tech-heavy Nasdaq are doing even better, up 3% and 4%, respectively. Notable among the stocks enjoying the euphoria today are three consumer goods companies in particular: toymakers Hasbro (NASDAQ: HAS) and Mattel (NASDAQ: MAT), up 5.1% and 6.6%, respectively, and Walmart (NYSE: WMT) with a 0.9% gain (although Walmart, too, was doing even better, earlier).

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Why consumer goods stocks love President Trump's new tariffs policy

What's behind the optimism? Mr. Donald J. Trump.

Earlier in the week, as you may recall, President Trump spooked stock markets with calls for the dismissal of Federal Reserve Chairman Jerome Powell, and threats that failure on the Fed's part to lower interest rates would hurt the economy, raising the specter of recession in many investors' minds. The President's tariffs war, too, was in full swing, with little evidence (yet) of other countries bowing to his demands for economic concessions to avoid imposition of "reciprocal" tariffs.

But my, what a difference a day (or two) makes!

As Wednesday dawned, the President had changed his tune on Powell entirely, reassuring investors he actually has "no intention" of firing the Fed Chair. On tariffs, too, the news is now good, or at least substantially less bad than it seemed on Monday. The President is now promising to "substantially" reduce tariffs on Chinese imports from their current, prohibitive, level of 145%. Once all is said and done with his negotiations, promises the President, tariffs "won't be anywhere near that high."

This, in a nutshell, is why shares of Hasbro, Mattel, and Walmart are all benefiting today. While exact percentages are hard to nail down, and vary year to year, Hasbro and Mattel are both widely recognized to depend heavily on imports of toys, cheaply manufactured in China, to sell to American consumers. Estimates range as high as 70% for the amount of their toys that both companies source from China.

Likewise Walmart is not just a big retailer for both companies' products, but a big retailer of lots of other consumer goods sourced from China. 145% tariffs on Chinese imports could have blown (and to be honest, probably still can) blow a big hole in the business models of all three companies.

But that risk has now come down -- how did the President put it? -- "substantially."

Which of these stocks would you buy?

All this being said, when stock markets score back to back 1,000-plus point gains on headline news, and particularly headline news coming from a source as erratic as Mr. Trump, there's a risk of investors getting irrationally exuberant.

While I'm as happy as any other investor today, to learn that the threat of a global trade war and U.S. recession may not be quite as dire as it looked a couple days ago, valuation still matters. If you're looking to play today's rally in consumer goods stocks, that means you're probably safer sticking to low price-to-earnings ratio stocks like Hasbro, which costs a modest 19 times earnings, or even Mattel -- twice as cheap with a P/E of barely 9x earnings -- than with a relatively expensive retailer like Walmart, which costs nearly 40 times earnings.

Remember: What President Trump giveth today, he could just as easily taketh away tomorrow with another U-turn on tariffs policy. Caveat investor -- and stick to value stocks if you want to stay safe.

Should you invest $1,000 in Walmart right now?

Before you buy stock in Walmart, consider this:

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Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $561,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $606,106!*

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Walmart. The Motley Fool recommends Hasbro. The Motley Fool has a disclosure policy.

Could investing in a simple, low-fee S&P 500 index fund today set you up for life? You may not want to know the answer. You may prefer to hunt for exciting growth stocks instead. But I'm here to tell you that regularly plunking meaningful sums in an S&P 500 index fund can do wonders over long periods.

Even Warren Buffett has endorsed S&P 500 index funds, stipulating in his will that much of what he leaves his wife should go into one. Here's a look at why you might consider investing in an S&P 500 index fund, too.

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Image source: Getty Images.

Meet the S&P 500 index

An S&P 500 index fund is an index fund that tracks the S&P 500 -- an index (a grouping) of 500 of the biggest companies in the U.S. The fund will hold roughly or exactly the same stocks in roughly the same proportion, aiming for roughly the same performance -- less fees. And there are some very low fees out there.

Here are the recent top 10 components in the index by weight:

Data source: Slickcharts.com, as of April 16, 2025.

It's worth noting that this index is a market-capitalization-weighted one, meaning that the biggest companies in it will move its needle the most. For example, you can see in the table above that Microsoft's weighting is about four times that of Tesla, so Microsoft's stock-price moves will make a much bigger difference in the index than will Tesla's. Of course, these are still the top 10 components. General Mills is also in the index, recently in 255th place, and with a weighting of just 0.07%. Toy company Hasbro, in 488th place, recently had a weighting of 0.02%.

Altogether, these 500 companies make up about 80% of the total value of the U.S. stock market. Thus, the S&P 500 is often used as a proxy for the market. It's mainly made up of giant, large, and medium-sized companies, though. If you want a more accurate proxy, you might opt for a broader index fund, such as the Vanguard Total Stock Market ETF (NYSEMKT: VTI), which aims to include all U.S. stocks, including small and medium-sized ones, or the Vanguard Total World Stock ETF (NYSEMKT: VT), encompassing just about all the stocks in the world.

Why invest in an S&P 500 index fund?

Here's a top-notch S&P 500 index fund to consider -- the Vanguard S&P 500 ETF (NYSEMKT: VOO). Its expense ratio (annual fee) is a mere 0.03%, meaning that for every $1,000 you have invested in the fund, you'll pay an annual fee of... $3.

Why invest in such a fund? Well, because it can perform really well over time and it's way easier to just keep adding money to it than to spend time studying investing and scouring the stock market for the best investments. Instead of looking for a few needles in a haystack, buy the haystack!

Owning shares of an S&P 500 index fund means you'll quickly own (small) chunks of 500 of the biggest companies in America -- and as some companies grow and others shrink over time, the index will be adding and dropping components accordingly.

The table below shows how big a nest egg you might build over time in an S&P 500 index fund, if your money grows at 8%. For context, the S&P 500 has averaged annual gains of around 10% over many decades -- including dividends and not including the effect of inflation. So using 8% is a mite conservative.

Source: Calculations by author.

If that's not convincing enough, know that you probably can't do as well with some other, managed large-cap stock mutual fund. The S&P 500 index has actually outperformed most such funds, which tend to be run by highly trained financial professionals working hard to outperform the index. Over the past 15 years, for example, the S&P 500 bested 89.5% of all large-cap funds.

Whether you opt for a low-fee S&P 500 index fund or not, be sure to have a solid retirement plan, and to be saving and investing in order to have a comfortable financial future.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 781%* — a market-crushing outperformance compared to 149% for the S&P 500.

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*Stock Advisor returns as of April 21, 2025

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Selena Maranjian has positions in Alphabet, Amazon, Apple, Berkshire Hathaway, Broadcom, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, Meta Platforms, Microsoft, Nvidia, Tesla, Vanguard S&P 500 ETF, and Vanguard Total Stock Market ETF. The Motley Fool recommends Broadcom and Hasbro and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.