Wall Street rebounds as easing trade war hopes lift markets

By Gokhan Ergocun

ISTANBUL (AA) - US stocks rallied Tuesday, with the Dow Jones Industrial Average jumping more than 1,000 points, as investors reacted positively to signs that tensions in the ongoing US-China trade war may be easing.

The rebound followed a sharp decline Monday, which had been triggered by renewed criticism from President Donald Trump directed at Federal Reserve Chair Jerome Powell. Markets were rattled by fears of a deepening divide between the Fed’s policy stance and the Trump administration’s aggressive trade measures.

US Treasury Secretary Scott Bessent said in a meeting with investors Tuesday that current tariff rates are “not sustainable” and expressed expectations for a near-term reduction in tensions with China.

Investors also kept a close eye on developments from the Spring Meetings of the International Monetary Fund (IMF) and the World Bank in Washington. The IMF downgraded its global growth forecast to 2.8% for 2024 and 3% for 2025, citing rising trade tensions and growing policy uncertainty.

IMF's chief economist Pierre-Olivier Gourinchas said a US recession is not expected, though he noted that the likelihood of one has increased. The IMF also warned that recent US tariff actions have intensified volatility in global markets and amplified financial stability risks.

At the close, Dow Jones Industrial Average surged 1,016 points, or 2.66%, to 39,186.98, S&P 500 rose 2.51% to 5,287.76, and Nasdaq Composite jumped 2.71% to 16,300.42 points.