US equities extended a rebound into a third session Tuesday as traders weighed the ongoing global trade war against a slew of positive earnings reports from Wall Street banks.
The S&P 500 Index climbed 0.6% at 10:06 a.m. in New York, while the technology-heavy Nasdaq 100 Index advanced 0.8%. Bonds yields retreated after Treasury Secretary Scott Bessent downplayed the recent selloff, dismissing speculation that foreign nations were dumping their holdings.
The Canadian government said it will allow automakers to import a number of US-made cars and trucks without tariffs, as long as the companies keep manufacturing vehicles in Canada.
Meanwhile, China ordered its airlines not to take any further deliveries of Boeing Co. jets as part of the latest retaliation in an escalating trade war with the White House. Beijing asked that Chinese carriers halt any purchases of aircraft-related equipment and parts from US companies, Bloomberg News reported Tuesday morning. The order came after China unveiled retaliatory tariffs of 125% on American goods this past weekend.
The development “underscores the fact that the trade war also hurts our exporters,” said Kevin Gordon, senior investment strategist at Charles Schwab & Co, adding that exports comprise 11% of gross domestic product. “Any softening in foreign demand due to tariffs imposed by the US will also pull US growth down.”
The White House also pressed forward with plans to impose tariffs on semiconductor and pharmaceutical imports by initiating trade probes led by the Commerce Department.
Meanwhile, investors are also evaluating earnings readouts from Corporate America. Bank of America Corp. and Citigroup Inc. reported revenues that beat estimates as traders reaped the benefits of volatile markets. Johnson & Johnson is holding its earnings outlook steady despite President Donald Trump moving toward imposing tariffs on the pharmaceutical industry.
US equities have stabilized in recent trading sessions for the first time since Trump unleashed sweeping tariffs on the world in early April, as the president and his aides offered some tariff exemptions across consumer technology products and auto parts. But Wall Street remains skeptical of lasting calm as worries remain that trade policies could jettison the economy into a recession and reignite inflation.
“I wouldn’t be surprised if we retest the lows, but I also wouldn’t be surprised if we had already hit the lows, “ said Gina Bolvin, president of Bolvin Wealth Management Group Inc. “It’s like a coin flip.”
Investor sentiment around the economic outlook is the most pessimistic in 30 years, a Bank of America Corp. survey shows, yet the negativity is not fully reflected in asset allocations, leaving scope for further losses for US stocks.
Fund mangers are “max bearish on macro, not quite max bearish on the market,” BofA strategists led by Michael Hartnett wrote in a note to clients, adding that “peak fear” has not yet been reached.
As traders brace for the next barrage of tariff headlines, a corner of the options markets is offering clues around how extreme the volatility can get. A measure of one-day equities volatility eclipsed the more closely watched Cboe Volatility Index, or VIX — which doesn’t take into account zero-day options — for the longest stretch since the boom in these types of derivatives started in 2022.
The S&P 500 gained last week but is still down roughly 8% in 2025. The benchmark closed trading last Tuesday having lost 15% in 2025, before reversing course on Thursday when Trump announced a 90-day delay on many of his tariffs.
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