U.S. stocks staged a powerful rally on Tuesday, clawing back losses from the previous session as traders grew hopeful that the tense trade standoff between Washington and Beijing may soon ease.
The Dow Jones Industrial Average soared 1,009 points, or 2.7%, while the S&P 500 jumped 2.4% and the Nasdaq Composite advanced 2.5%. The rebound marked one of the strongest single-day performances for equities this month.
Investor sentiment turned sharply after Treasury Secretary Scott Bessent signaled a possible thaw in trade relations between the U.S. and China. During a private meeting hosted by JPMorgan, Bessent described the current standoff as “unsustainable” and hinted that de-escalation was increasingly likely. According to Bloomberg sources, he told investors, “No one thinks the current status quo is sustainable.”
China-Linked Stocks and Crypto Join the Rally
Shares tied to China moved higher on the news. Both the iShares China Large-Cap ETF and the iShares MSCI China ETF climbed approximately 3%, reflecting optimism around reduced trade tensions.
The rally also extended into digital assets. The global crypto market cap rose to $2.85 trillion, representing a 4.30% gain in 24 hours. Bitcoin surged 5.55%, reaching $91,340, according to data from crypto.news.
Optimism Cooled by Caution Over Timelines
Despite the early surge, markets eased slightly from intraday highs after Bessent tempered expectations by noting that formal trade negotiations had not yet begun. He added that reaching a final agreement could take considerable time. “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,” he said.
This comment served as a reminder that while sentiment may have shifted, the path to resolution remains uncertain and lengthy, with many complexities to resolve.
Tesla Recovers Amid Broader Rebound
Tesla shares rose 5% ahead of the company’s upcoming earnings report. The bump comes despite the EV giant’s stock still being down roughly 40% year-to-date, weighed by sluggish demand and ongoing political controversy surrounding CEO Elon Musk.
The overall recovery followed a rough start to the week, when the Dow plunged nearly 1,000 points on Monday after President Trump sharply criticized Federal Reserve Chair Jerome Powell, rattling investor confidence.As markets remain focused on geopolitical developments and domestic economic policy, the potential for a U.S.-China trade breakthrough has added a spark of optimism — even if the road ahead remains bumpy.
