[New York Stock Market] Broad Rebound on Optimism Over U.S.-China Tariff Talks... Extreme Volatility Continues

Besant: "U.S.-China Tensions Will Ease in the Near Future"
Markets Rebound Over 2% Just a Day After Sharp Drop
Rollercoaster Trading Persists Amid Tariff Uncertainty
IMF Chief Warns: "Prolonged Tariff Issues Could Lead to Recession"

On April 22 (local time), all three major indices on the New York Stock Exchange surged by more than 2%. Remarks by U.S. Treasury Secretary Scott Besant, suggesting that the U.S.-China tariff war would ease in the very near future, boosted investor sentiment. The wave of "Sell America," including sell-offs of U.S. Treasuries and the dollar, also subsided. Analysts noted that the stock market continues to experience extreme volatility due to uncertainty surrounding tariff policies.

Reuters Yonhap News

On this day, the Dow Jones Industrial Average, which is focused on blue-chip stocks, closed at 39,186.98, up 1,016.57 points (2.66%) from the previous trading session. The S&P 500, which tracks large-cap stocks, rose by 129.56 points (2.51%) to 5,287.76. The Nasdaq, which is centered on technology stocks, jumped by 429.52 points (2.71%) to finish at 16,300.42.

By stock, Tesla jumped 4.6% ahead of its earnings announcement after the market closed. Apple rose 3.41%, and Nvidia gained 2.04%. Alibaba Group and Baidu increased by 5.23% and 2.51%, respectively.

The market was relieved by Secretary Besant’s outlook for easing U.S.-China trade tensions. On April 22 (local time), Secretary Besant attended a closed-door investor event hosted by JP Morgan Chase in Washington, D.C., where he stated that the tariff war between the U.S. and China is unsustainable and that "the situation will ease in the very near future." He acknowledged that negotiations between the two countries would be "difficult," but added, "Neither side believes the current situation is sustainable." He also made it clear that President Trump’s policy objective is "not U.S.-China decoupling." He projected that a comprehensive agreement between the two countries could be reached within two to three years.

The White House also stated that, although U.S.-China trade negotiations have not yet begun, efforts to reach a new agreement are "progressing very well." White House spokesperson Karoline Leavitt told reporters that "we are doing very well ahead of a trade agreement with China," adding, "President Trump is laying the groundwork for negotiations with China, and things are moving in the right direction." She also revealed that the U.S. trade team would hold meetings with 34 countries just this week. She raised expectations for progress in trade negotiations, noting that more than 100 countries wish to reach trade agreements with the U.S., and that the U.S. has received a total of 18 written proposals from various countries so far.

The previous day, the financial markets saw a pronounced "Sell America" phenomenon, with simultaneous declines in U.S. stocks, Treasuries, and the dollar. This followed President Trump’s renewed pressure on Federal Reserve Chair Jerome Powell to cut interest rates, which heightened concerns about the independence of monetary policy. However, just one day after the sharp drop, bargain hunting in the morning helped the market attempt a rebound, and after Secretary Besant’s remarks were reported, the gains widened, with the indices closing up more than 2%.

Jed Ellerbrook, portfolio manager at Argent Capital Management, commented, "With these remarks, Besant clearly intended to send a signal to the market," adding, "They know they have hurt the market, and this is a signal to end it quickly." He continued, "The market is interpreting this as good news, and it will trigger a rally," and added, "Expectations for the final truce point of the trade war in a few months will also be adjusted."

Although the panic selling subsided within a day amid extreme uncertainty over tariff policies, concerns about an economic slowdown persist. Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), said in an interview with Bloomberg TV that uncertainty has become "off the charts" due to the threat of tariffs. She warned, "If we fail to ease trade tensions and uncertainty remains very high, the tariff issue will be prolonged and global growth will fall further," adding, "The risk of recession could increase." The IMF has sharply downgraded its economic growth forecasts for both the U.S. and the global economy for this year and next, citing the impact of President Trump’s tariff policies. In its World Economic Outlook (WEO) report released on this day, the IMF projected global economic growth at 2.8%, down 0.5 percentage points from its previous estimate. The U.S. growth rate for this year was forecast at 1.8%, 0.9 percentage points lower than the previous projection.

Anwiti Bahuguna, Chief Investment Officer for Global Asset Allocation at Northern Trust Asset Management, stated, "We are in a period of extreme uncertainty," and cautioned, "We should not overreact to day-to-day movements."

In the Treasury market, selling pressure in long-term bonds has eased, leading to slightly lower yields. The yield on the 30-year U.S. Treasury, which had surged the previous day, fell by 2 basis points (1bp = 0.01 percentage points) to 4.88%. The yield on the 10-year U.S. Treasury, the global benchmark, remained around the previous day's level at 4.39%. In contrast, the yield on the 2-year U.S. Treasury rose by 6 basis points to 3.82%, showing a divergence in yields by maturity.

The dollar is also rising. The dollar index, which measures the value of the dollar against the currencies of six major countries, is up 0.68% from the previous session, standing at 98.71.