Stocks close with gains as White House signals trade progress with China

U.S. stock markets closed with solid gains Tuesday as traders bought into the idea that President Trump's trade war with China could cool down.

Markets were up in the morning, but momentum really picked up Tuesday afternoon after several media outlets revealed comments from Treasury Secretary Scott Bessent, who told a private meeting of investors in Washington that he expects a “de-escalation” in the trade war between the U.S. and China.

“No one thinks the current status quo is sustainable,” Bessent said at the event hosted by JPMorgan Chase, according to multiple reports.

White House press secretary Karoline Leavitt declined to elaborate on those comments during a Tuesday briefing, but she said the administration is “doing very well in respect to a potential trade deal with China.”

“The president and the administration are setting the stage for a deal with China,” Leavitt said. “So we feel everyone involved wants to see a trade deal happen, and the ball is moving in the right direction.”

The rebound caps off another wild two-day stretch for the stock market, which closed with losses Monday amid Trump’s continued attacks on the Fed. All three major indexes lost roughly 2.5 percent Monday, all while selloffs of U.S. bonds and dollars escalated.

But a day later, the indexes made up for some of those losses. The Dow Jones Industrial Average was up 1,016 points, or 2.66 percent, while the tech-heavy NASDAQ rose 429 points, or 2.71 percent. The S&P 500 index rose 2.5 percent.

Markets dropped Monday as Trump stepped up his criticism of Federal Reserve Chair Jerome Powell.

Trump called Powell a “major loser” Monday and suggested the Fed’s previous rate cuts were aimed at helping former President Biden.

The president backtracked Tuesday, saying he has no intention to fire Powell.

The International Monetary Fund (IMF) also drastically slashed its growth forecast for both the U.S. and global economies, pointing the finger at Trump’s steep new tariffs.

But the dour IMF outlook did not appear to make waves on Wall Street, where more attention was paid to Bessent's positive statements behind closed doors.