Despite an uncertain start , Wall Street continued its relief rally on Thursday morning, a day after President Trump floated a potential trade deal with China.
The Dow Jones Industrial Average dipped in early trading but quickly climbed, increasing 236 points, or 0.6% by 11:45 a.m. EST. The S&P 500 rose 67 points, or 1.2%, while the Nasdaq Composite increased 1.8%. After early gains, the indexes steadied by midday.
It was unclear whether the market rebound would continue for a third day after futures slumped , as Mr. Trump's trade war continues to roil markets. Investors, however, are placing confidence in the markets keeping the president's policies in check.
"The latest shift in tone from the White House has rekindled confidence in the 'Trump put' — the notion that when tested by the market, the president will soften his stance — whether on trade or Fed independence," said Ulrike Hoffmann-Burchardi, the CIO for global equities at the UBS Chief Investment in a research note.
The relief rally started Tuesday after Mr. Trump signaled he would lower tariffs on China and also walked back comments that he would fire Federal Reserve Chair Jerome Powell, who along with the Federal Open Market Committee, is in charge of setting interest rates.
China has denied the countries are in active negotiations over tariffs, with Ministry of Commerce spokesman He Yadong calling those claims "groundless as trying to catch the wind."
Trade talks, however, are underway with other nations that could be impacted by so-called reciprocal tariffs, which are currently on pause for 90 days . U.S. Trade Representative Jamieson Greer began talks with Vietnam on Tuesday with a virtual meeting with trade minister Nguyen Hong Dien, described as "productive," in a statement from the U.S. trade representative's office.
Tariffs aren't only top of mind for investors — they're also worrying everyday Americans. An AP-NORC poll released today found that over three-fourths of Americans think tariffs will drive up the costs of consumer prices.
The International Monetary Fund earlier this week projected slower U.S. economic growth this year in its World Economic Outlook, citing headwinds from the escalating trade war and "high levels of policy uncertainty." Despite the slowdown, the organization does not predict a recession.
Analysts also remain optimistic as far as the likelihood of a recession is concerned. "Shifting narratives out of Washington have kept volatility elevated, but it's possible that tariffs will turn out to be more of a hit to earnings and the markets rather than a recession event," said Daniel Skelly, head of Morgan Stanley's wealth management market research & strategy team.
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