U.S. stocks surged on Tuesday, with investors buoyed by signs the U.S. could be prepared to deescalate its trade war with China.
The Dow rose more than 1,000 points, or 2.7%, to close at 39,187. The S&P 500 rose 130 points, or 2.5%, to close at 5,288, while the Nasdaq rose 2.7%.
The rebound suggests a more bullish attitude among investors who yesterday rushed to unload shares after Mr. Trump on Truth Social on Monday renewed his criticism of Federal Reserve Chair Jerome Powell for being “too late” to act, causing markets to major slump.
The potential Fed shakeup, coupled with uncertainty about trade policy, sent the Dow tumbling over over 1,000 points on Monday.
Mark Luschini, chief investment strategist with Janney Montgomery Scott, said he’s not sure what spurred today’s turnaround, but noted comments from Treasury Secretary Scott Bessent about easing conflict with China may have played a role.
“I think it was just a function of investors getting a little bit offsides relative to conditions being oversold, and today was a rally, not so much on anything that I could point to as newsworthy,” Luschini said.
Investors are also likely to take comfort from Mr. Trump saying Tuesday that he has “no intention of firing” Federal Reserve Chair Jerome Powell. The pledge came one day after the president called Powell a “major loser” and publicly lobbied the central bank chief to lower interest rates at a faster clip.
The U.S. and China have yet to formally start tariff negotiations, although Mr. Trump has met with a handful of other foreign governments that could be affected by so-called “reciprocal tariffs” if they were to take effect after the 90-day pause ends.
Despite the positive day on Wall Street, Trump’s trade war continues to shake up markets around the world. The International Monetary Fund’s World Economic Outlook, released Tuesday, said the U.S. economy will grow 1.8% this year, down full percentage point from last year, citing the escalating trade war and “high levels of policy uncertainty.”
Global shares were trading mixed Tuesday, with the major Eurozone indices all edging down during early trading. Stock prices in Asia were mixed.
“Across Asia, there is undoubtedly a sense of urgency to get to the negotiation table even as striking a deal at an appropriate cost can be tough,” Tan Boon Heng, at Mizuho Bank’s Asia & Oceania Treasury Department, told the Associated Press.
The Dow Jones Industrial Average is on track for its worst April since 1932, The Wall Street Journal reported.
The dollar index steadied on Tuesday after sliding to its lowest level in three years on Monday, while the yield on the 10-year Treasury continued to climb, rising to 4.43% overnight before landing at 4.39% in the morning. Both the dollar index and yields on Treasury notes are key indicators of how much faith investors have in the economy.
contributed to this report.
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