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 (HAS 2.59%) and Mattel (MAT 5.21%), up 5.1% and 6.6%, respectively, and Walmart (WMT -0.29%) with a 0.9% gain (although Walmart, too, was doing even better, earlier).

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.