Stocks rallied Tuesday, ending a four-day losing streak because U.S.-China trade tensions could ease soon. The Dow Jones Industrial Average rose 1,016.57 points, or 2.66%, closing at 39,186.98. The S&P 500 gained 2.51% and settled at 5,287.76, while the Nasdaq Composite rose 2.71% to end at 16,300.42. Investors recovered from steep declines from the previous session. According to Treasury Secretary Scott Bessent, there “will be a de-escalation” in the trade war with China. Stocks spiked on this news. However, Bessent mentioned, “If we walk out the door of negotiations and signed something in two or three years that looked like that, I would think that it’s a huge win.” The iShares China Large-Cap ETF (FXI) and the iShares MSCI China ETF (MCHI) were both up about 3%. “Bessent is obviously trying to send a signal with that comment, and that signal would seem to be that we know this is hurting markets and we’re in a hurry to wrap it up,” said Jed Ellerbroek, a portfolio manager at Argent Capital Management. “The market will interpret that as good news that will cause it to rally and adjust its expectations for where the final resting place for this trade war is in a couple months.” On Tuesday, stocks reversed their declines from the previous session. The Dow Jones Industrial Average surged 1,016.57 points, or 2.66%, and settled at 39,186.98. The S&P 500 gained 2.51% and finished at 5,287.76, while the Nasdaq Composite added 2.71% to close at 16,300.42. Stocks could decline further if a 10% universal tariff is implemented, according to UBS. “The first scenario takes the Trump administration at face value and assumes that the tariffs currently in place, 10% universal tariffs — 145% tariffs on imports from China + selected sectoral tariffs, will all remain. The second scenario sees the 10% universal tariffs staying but assumes a climbdown to 60% China tariffs,” wrote strategist Bhanu Baweja. Under both scenarios, the strategists believe that the market bottom is not in yet. “We may be past peak tariff uncertainty, but it’s still a high plateau, which will have a material impact on earnings growth, which doesn’t appear to be priced presently. Valuations, too, will adjust lower still as U.S. exceptionalism wanes,” Baweja wrote. The UBS strategists added that the market will likely bottom around the beginning of 2025’s third quarter. The tech sector, down 21% year to date, is the second-worst performing sector in the S&P 500 of 2025. But in a Tuesday note, Barclays strategist Venu Krishna claimed that this underperformance is “outsized already.” “Tech tends to lag the SPX over the peak-to-trough phase but underperformance since the 2/19/25 index peak has overshot that of a typical bear market,” Krishna wrote. “Tech also tends to be a winner during the recovery phase showing the best relative returns among all sectors over the 12 months following market troughs.” The strategist added that the financials, industrials and materials sectors could be at risk for more downside if the selloff worsens. In a Monday note, BCA Research identified the most likely outcome of Trump’s tariff policies as a margin squeeze. “Our analysis indicates that tariffs will deduct two percentage points from the S&P 500 net margins,” the investment research firm wrote. Chief strategist Irene Tunkel wrote that this mounting trade war might not bode well for the upcoming earnings season. “Investors are now more focused on corporate guidance than earnings, as they try to look around the corner and gauge the effect of tariffs on companies and industries,” she wrote. “As companies process the effect of tariffs and the trade war, we expect a lot of negative or pulled guidance for Q2 and anticipate an avalanche of downgrades to follow.” Short sellers in Tesla have made $11.5 billion in 2025 and are counting on even more gains, according to short selling research specialist S3 Partners. Tesla reports first quarter financial results after the market close Tuesday. Stocks have melted down in recent weeks on the back of heightened, tariff-induced uncertainty. But there’s some good news ahead, Piper Sandler wrote in a Tuesday note. The U.S. equity market has become too big to fail. “The size of U.S. equities is double the size of U.S. GDP and 60% percent of US households own stocks. The average stock market decline in a recession is 30%; a loss of that magnitude would equate to more than 60% of U.S. GDP!” the firm said. “While markets certainly will continue to rise and fall, the pain threshold where policymakers step in to support collapsing markets is probably lower than it used to be.” Life sciences company Danaher popped 5% on Tuesday after posting a fiscal first-quarter earnings and revenue beat. In its last quarter, the company earned an adjusted $1.88 per share on revenue of $5.74 billion. Analysts polled by FactSet had expected earnings of $1.63 per share and revenue of $5.57 billion. Jed Ellerbroek, portfolio manager at Argent Capital Management, said that Danaher’s earnings beat bodes well for the overall bioprocessing sector. Ellerbroek currently has an overweight rating on the name and believes shares could rise to $260, implying a potential upside of nearly 41% for the stock. “Bioprocessing has done really poorly for the last two years, but it seems like we finally pulled out of that industry’s recession — and it’s a great time for that, because the rest of the world is probably going into a recession,” he told CNBC. “I think Danaher is a really good company. They reported a good first quarter. Their guidance looks conservative to me for the rest of the year, and I think that the company has good things ahead for it.” These are some of the stocks making the biggest moves midday: • 3M — The manufacturing conglomerate jumped 8% on a first-quarter earnings beat. 3M earned an adjusted $1.88 per share on $5.78 billion of revenue, beating the LSEG consensus forecasts of $1.77 per share and $5.76 billion in revenue. • GE Aerospace — Shares gained 5% after GE Aerospace’s first-quarter earnings per share topped forecasts. Adjusted earnings came in at $1.49 per share, ahead of the $1.27 per share figure anticipated by analysts polled by LSEG. • CoreWeave – Shares of the artificial intelligence cloud company jumped more than 7% aftermultiple analysts initiated coverage of the stock with a buy or overweight equivalent rating. Click here for the full list. Bank of America slashed its price target on Tesla Tuesday ahead of the EV company’s highly scrutinized quarterly earnings after the bell. The Wall Street firm cut its forecast to $305 from $380, with the new target still 34% higher than Monday’s close of $227.5. The bank said it will look for commentary on tariffs. “Tesla manufactures all of their vehicles for North America in the US, which significantly reduces tariff risk,” Bank of America said. “However, we note that there is still risk related to parts (~30% parts are non-US), which could be substantial especially for those input materials that could be connected to China, such as rare earths and raw material for batteries.” Bitcoin reclaimed the $90,000 level for the first time since March as investors jumped into the crypto for a second day amid continued stock market turbulence and a falling dollar. The price of bitcoin was last higher by more than 3% at $90,282.00, according to Coin Metrics, bringing its 2-day gain to more than 7%. Earlier, it rose as high as $91,555.18, its highest level since March 6. Bitcoin is off its April low now by about 22%. Gold’s June-dated futures hit a fresh intraday all-time high of 3,509.9 on Tuesday morning, coming close to eclipsing the intraday inflation-adjusted all-time high of 3,588.49 and trading above the inflation-adjusted record settle of 3,428.18, both from Jan. 21, 1980. The SPDR Gold Shares ETF (GLD) traded at an all-time high back to its inception in November 2024. The Gold Miners ETF (GDX) hovered near its highest level since October 2012. Stock futures tied to the Dow, S&P 500 and Nasdaq 100 all traded near flat shortly after 6 p.m. ET Monday night.
