US stocks jump on White House optimism on China trade deal

Wall Street stocks soared Tuesday, rebounding from the prior day's rout, after upbeat comments from Trump administration officials about US-China trade talks.

US Treasury Secretary Scott Bessent told a closed-door event in Washington that the tit-for-tat tariff war would de-escalate soon.

Later, White House spokeswoman Karoline Leavitt told reporters, "the president and the administration are setting the stage for a deal... the ball is moving in the right direction."

Major indices spent the entire day in positive territory, with the Dow Jones industrial Average finishing at 39,187.04, up 2.7%.

The broad-based S&P 500 gained 2.5% to 5,287.76, while the tech-rich Nasdaq Composite Index jumped 2.7% to 16,300.42.

Tuesday's rally is "another example of how the risk is to the upside," said CFRA Research's Sam Stovall, who characterized the market as oversold due to bearish sentiment.

But the International Monetary Fund slashed its forecast for global growth this year, citing the effect of US President Donald Trump's new tariff policies.

Major indices fell about 2.5% on Monday after Trump renewed his attacks on Federal Reserve Chair Jerome Powell, moves that prompted another rise in US Treasury bond yields.

However, bond yields retreated on Tuesday.

Stovall said the market is very uncomfortable with Trump's pressure on Powell.

The threat of Trump firing Powell "is enough to push the market down three percent," Stovall said. "If he actually did it, I think it would push the market down even further."

Gains were broad-based on Tuesday, which included a heavy day of earnings news.

On the positive side, GE Aerospace jumped 6.1% as it reported higher profits and said it had enacted a number of cost-control measures to counter tariff effects.

But RTX dove 9.8% as the defense giant disclosed an estimated hit of $850 million due to tariffs.