U.S. stocks bounced back on Tuesday after a steep sell-off on Monday, with all three major indexes surging as investors felt renewed optimism in signs of de-escalation in President Trump’s ongoing global trade conflicts.
The S&P 500 (GSPC) gained 2.10%, rising over 108 points to 5,266.76 by early afternoon. The Dow Jones Industrial Average (DJI) climbed 2.13%, while the Nasdaq Composite (IXIC), powered by strength in tech, jumped 2.43%. The rally followed reports that Treasury Secretary Scott Bessent described the current trade tensions with China as “unsustainable,” fueling speculation that negotiations may soon cool.
Market Movers:
- Tesla (TSLA) | +5%: The stock climbed ahead of earnings after the bell, despite ongoing concerns about slowing demand and CEO Elon Musk’s controversial presence in the White House. Investors seem cautiously optimistic that the EV maker will stabilize its footing, at least in the short term.
- CoreWeave (CRWV) | +6.96%: The AI firm surged after major Wall Street firms initiated coverage with bullish ratings. Backed by Nvidia, analysts say the company is well-positioned to ride the wave of demand for AI compute, despite volatility concerns stemming from its rocky IPO.
- PulteGroup (PHM) | +7.54%: Shares jumped after posting better-than-expected earnings. However, executives warned that rising tariffs will likely raise home prices across the board, which could weigh on future demand despite near-term investor enthusiasm.
- Bitcoin (BTC-USD) | +4.39%: The world’s largest cryptocurrency traded just below $91,000, nearing February highs. The move reflects a broader flight to alternative assets amid investor unease about political interference in U.S. monetary policy.
A Rebound Fueled by Diplomacy and Disruption
Tuesday’s turnaround is driven largely by a rare moment of reassurance on the trade front. Bloomberg reported that Treasury Secretary Bessent, speaking at a private investor summit, cast doubt on the longevity of the U.S.–China tariff standoff. His remarks offered a contrast to Monday’s chaos, when Trump’s social media attacks on Fed Chair Jerome Powell sent markets spiraling.
This softening stance toward China—and additional positive signs from meetings with India—reinvigorated risk-on sentiment across sectors. Every major S&P sector was trading in the green, with consumer discretionary, financials, and communication services leading the pack.
Safe Havens Shunned as "Sell America" Trade Takes Hold
Interestingly, investors didn’t flood into traditional safe-haven assets despite geopolitical uncertainty. The 10-year Treasury yield hovered around 4.4%, and the U.S. dollar index slipped below a key psychological level of 100. Instead, money flowed into gold and crypto, with gold setting another record and bitcoin nearing all-time highs.
Wall Street strategists have dubbed this reversal the “sell America” trade—a rare move that reflects deep concerns about political meddling in monetary policy. The combination of rising tariffs, slow economic growth, and central bank instability is causing investors to seek safety in globally accepted, non-dollar assets.
Economic Indicators Paint a Bleak Picture
While markets rallied, new data suggests the U.S. economy is far from being in the clear. A pair of regional Fed surveys showed sharp declines in both manufacturing and non-manufacturing activity, highlighting the real-world impact of tariff escalations.
The Richmond Fed’s manufacturing index fell to -13 in April, with new orders and employment expectations tumbling. Meanwhile, the Philadelphia Fed’s non-manufacturing outlook dropped to its lowest level since the pandemic-era lows of 2020. Inflationary pressures are also brewing, with prices paid rising across the board—a sign that businesses are starting to pass on costs to consumers.
Looking Ahead
Despite Tuesday’s broad-based rally, the path forward remains murky. Investors will be closely watching Tesla’s earnings after the bell for clues about consumer sentiment and tech demand. Meanwhile, the Fed’s next move remains uncertain, with Powell caught in the crosshairs of political pressure. Geopolitical tensions, tariff-driven inflation, and fragile consumer demand all remain threats to market stability. But for now, hope of progress on trade—however tentative—is enough to keep bulls in control, at least for the day.