Treasury Secretary Scott Bessent told investors Tuesday that the US-China trade war is unsustainable and he expects the battle to de-escalate, giving a boost to a Wall Street rally that had taken shape this morning.
The stock market made a strong comeback on Tuesday. The Dow rose by 1,017 points (2.66%), the S&P 500 increased 2.51%, and the Nasdaq gained 2.71%. This recovery erased Monday’s significant losses.
Stocks were already up Tuesday as investors bought after Monday’s big drop. They climbed even higher midday after Bessent’s comments at a private JPMorgan Chase event became public. According to someone at the meeting, Bessent explained that both countries will likely ease tensions soon because the extremely high tariffs have created what amounts to trade blockades between the US and China. He clarified that instead of completely cutting ties with China, the goal is to create a more balanced trading relationship.
All three major stock indexes reached their highest points of the day after Bessent’s remarks spread. The Nasdaq and Dow ended their four-day losing streaks, with all three indexes having their best day in two weeks. Despite this positive day, the S&P 500 is still on track for its worst month since 2022, and the Dow is heading toward its worst April since 1936.
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Investors remain nervous about trade negotiations with China and President Trump’s ongoing criticism of Federal Reserve Chair Jerome Powell. Stocks gave up some gains in the afternoon when White House press secretary Karoline Leavitt told reporters that both Trump and Economic Council Director Kevin Hassett questioned the Fed’s interest rate decisions. This renewed worries about potential White House interference with the Federal Reserve’s independence.
Monday saw an unusual market situation where stocks, government bonds, and the US dollar all dropped together. Typically, investors move to safer options like Treasury bonds and the dollar when stocks fall during uncertain times.
Gold briefly reached a new record high above $3,500 per ounce before falling more than 1%. Overall, gold has surged more than 28% this year as investors seek safety amid economic uncertainty. The International Monetary Fund has warned that Trump’s tariffs and the responses from trading partners will likely hurt economic growth worldwide, with the US economy feeling significant impacts.
Wall Street will be watching closely for signs of progress in trade talks and first-quarter earnings reports, especially Tesla’s results coming after today’s market close. Tesla’s stock has fallen over 40% this year amid controversy over Elon Musk’s government role and declining sales in Europe.
