At 12.30 pm, the Dow Jones surged 1,063 points or 2.79% to 39,234.26, the S&P 500 rose 146 points or 2.84% to 5,304.71, and the Nasdaq jumped 525 points or 3.31% to 16,396.03.
Some optimism on U.S. trade negotiations also helped indexes hit session highs after a report that U.S. Treasury Secretary Scott Bessent had said a tariff standoff with China was unsustainable, and that he expects the situation to de-escalate.
Investors sifted through a slew of quarterly earnings, with dozens more due through the week, for indications on how companies are navigating the uncertainty caused by tariffs and a potential hit to future earnings.
Earnings were a mixed bag on the day. Shares of industrial conglomerate 3M Co, the biggest gainer on the blue-chip Dow, jumped 6.9% after the company beat first-quarter profit expectations.
On the other hand, Northrop Grumman slumped 11.75% after reporting a sharp drop in profit, while RTX tumbled 8.9% after the company flagged a potential hit of about $850 million to its annual profit from the tariffs. The overall mood remained fragile as investors awaited Trump’s next move in his relentless tussle with Powell over interest rates, fueling concerns about the central bank’s autonomy and the future monetary policy path. Wall Street was down more than 2% on Monday as Trump doubled down against the Fed chair. “Right now, it is that normal bounce after drops,” said Ryan Dykmans, chief investment officer at Dunham & Associates Investment Counsel.
“I’m actually putting a little more credibility on the drops than the bounce… there is still a lot of uncertainty here and that doesn’t really bode well for the market in (the) short term.”
While the S&P 500 recovered the ground it had lost on Monday, it is yet to recoup declines since the April 2 “Liberation Day” tariff announcement and is more than 14% below its February 19 record closing high.
Megacaps also recovered, with Nvidia rising 1.9% and Apple up 2.8%.
All sectors on the S&P 500 rose, with consumer discretionary leading gains.
Tesla, which will kick off earnings for the “Magnificent Seven” megacap stocks after markets close, jumped 5.2%.
The economic outlook, however, remains uncertain. The International Monetary Fund slashed its forecasts for growth in the U.S. on Tuesday to 1.8% in 2025, while Citigroup said the U.S. economy has a 40% to 45% chance of falling into a recession.
Commentary from several Fed speakers is expected through the day and their remarks will be parsed for clues on the central bank’s policy outlook and view on rising tensions with the White House.
Advancing issues outnumbered decliners by a 6.28-to-1 ratio on the NYSE, and a 3.73-to-1 ratio on the Nasdaq.
The S&P 500 posted four new 52-week highs and one new low, while the Nasdaq Composite recorded 24 new highs and 61 new lows.
