US stocks continue to recover on hopes of easing US-China trade tensions

Traders on the NYSE floor on April 17, 2025 (Source: Reuters)

US stocks entered Wednesday’s session on a high note after US President Donald Trump said late Tuesday that he had no intention of firing Federal Reserve Chairman Jerome Powell and that tariffs currently in place on China could be “substantially reduced”.

“We had such a strong opening, and that really had to do with what was happening out of Washington,” said Russell Price, chief economist at Ameriprise in Troy, Michigan. Trump’s statements, he said, were “the two positives that the market was hoping for and they got it.”

Ross Mayfield, an investment strategist at Baird in Louisville, Kentucky, said most investors view the central banker as a stabilizing force in markets that have been shaken by the Trump administration’s chaotic trade policies. “The independence of the Fed is one of the unspoken bulwarks of the developed market system,” he said, adding: “So threatening that has clearly put pressure on bonds and the dollar and accelerated the rotation out of American assets.”

Investors' hopes for an easing of US-China trade tensions were further bolstered as US Treasury Secretary Scott Bessent continued to say that high tariffs between the US and China were unsustainable and Mr Trump signaled that he was willing to ease trade tensions between the world's two largest economies.

There have also been strong earnings reports from publicly traded companies. Of the 110 companies in the S&P 500 that have reported first-quarter earnings, 75% have beaten Wall Street estimates, according to LSEG. Analysts now see overall S&P 500 earnings growth of 8.4% for the January-March period, up from 8.0% as of the 14th.

However, all three major US stock indexes pared gains before the closing bell.

The Dow Jones Industrial Average closed up 419.59 points, or 1.07%, to 39,606.57. The S&P 500 Index rose 88.10 points, or 1.67%, to 5,375.86. The Nasdaq Composite Index rose 407.63 points, or 2.50%, to 16,708.05.

Tesla shares rose 5.3% after Elon Musk said he would significantly cut back on his work with the Trump administration to spend more time running his companies. Even so, the electric carmaker reported a 71% drop in net income in the first quarter.

Similarly, Boeing shares also rose 6.1% as the aircraft maker reported a smaller-than-expected quarterly loss thanks to more aircraft production and deliveries.

General Dynamics shares, on the other hand, fell 3.3% despite posting a 27% rise in first-quarter profit on solid defense demand, but orders for the company's business jets fell from the previous quarter…

Of the 11 major sectors in the S&P 500, technology and consumer discretionary posted the biggest percentage gains, while consumer staples and energy declined.

Advancing stocks still outnumbered declining stocks (3.28:1) on the New York Stock Exchange (NYSE). On Nasdaq, 3,277 stocks advanced to 1,141 (2.87:1).

Volume on U.S. exchanges was 17.40 billion shares, compared with the 19.18 billion average for the full session over the last 20 trading days.

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