Stocks bounced while bonds and the dollar stabilised, as an uncanny calm swept Wall Street after Monday’s plunge, with investors still fretting over a worsening outlook for global growth and the White House’s hostility toward Jerome Powell.
The S&P 500 rose 1.9% while the Nasdaq 100 jumped more than 2%. Big-tech stocks lead equity gauges higher as traders gear up for earnings from Tesla Inc. later in the day. Despite Tuesday’s bounce, the selloff this year has been especially brutal for tech companies, prompting options traders to favour protection against further declines.
Traders on edge continued to seek haven assets, pushing gold to a record high past $3,500. Bitcoin advanced 3.9%. Treasuries and the dollar posted smaller moves, showing greater stability after Monday, when investors fretted over the implications of any effort to replace the Federal Reserve Chair by President Donald Trump, who has berated Powell for being slow to cut interest rates.
“We are in a period of extreme uncertainty, where one should not react too much to daily moves,” Anwiti Bahuguna, Northern Trust Asset Management’s CIO of global asset allocation, said on Bloomberg Television on Tuesday.
Among individual movers, 3M Co. rose 7% after it stood by its full-year financial guidance while acknowledging new risks from the trade war. Boeing Co. agreed to sell its flight navigation unit and related assets to Thoma Bravo for $10.6 billion in cash; shares are up less than 1%. Verizon Communications Inc. reported a larger-than-expected decline in mobile-phone subscribers in the first quarter.
Central-Bank Speakers
Traders also heard from several central-bank speakers on Tuesday. European Central Bank President Christine Lagarde told CNBC that the bank has almost achieved its goal of returning inflation to 2%, but must be flexible as the economic backdrop becomes more volatile.
Earlier, Fed vice chair Philip Jefferson said the central bank’s goals of stable prices and maximum employment can help foster economic mobility. And Philadelphia Fed President Patrick Harker wrote in an essay released Tuesday that measuring economic stability with the federal poverty line can fail to provide an accurate picture of the struggles among lower-income households.
Tariffs
Even though stocks seem to be bouncing back on Tuesday, concerns that Trump may be preparing to fire Powell have added to unease for traders already grappling with the turmoil unleashed by the president’s tariff onslaught.
Trump’s policies and his broadsides against the Fed have forced a reappraisal of the dollar and Treasuries as havens in times of stress. The International Monetary Fund said the latest escalation in the trade war risks saddling China and the US with losses, and that it could only get worse after this year. Yet, some traders are waiting to see how negotiations play out with allies.
“We are looking at more successful trade negotiations with key trading allies. I put Europe, India, Japan, South Korea, Australia in that category,” Stuart Kaiser, head of equity trading strategy at Citigroup Inc., said on Bloomberg Television on Tuesday. “I think we will see good progress there, and that is good for markets.”
Attention later Tuesday will shift to Tesla, which reports first-quarter earnings after market close. The stock has dropped more than 40% this year as controversy over Chief Executive Officer Elon Musk’s role in the federal government has contributed to a global sales slump.
Meanwhile, the US said it’s made “significant progress” toward a bilateral trade deal following talks between Vice President JD Vance and Indian Prime Minister Narendra Modi. Vance on Tuesday called on India to buy more American goods, particularly energy and military equipment. Trump has repeatedly criticised the country for high tariffs.
Source: https://finance.yahoo.com/news/asian-stocks-drop-us-selloff-003202089.html
