[New York Stocks] Relief Rally for Second Day on U.S.-China 'Big Deal' Hopes... Powell Dismissal Concerns Eased

Trump Makes Conciliatory Remarks on Tariffs and Fed
Says of Powell, "No Intention to Fire Him"
WSJ: "U.S. Considering Cutting China Tariffs from 145% to 50%"
Treasury Secretary: "Opportunity for a Big Deal Between U.S. and China"
Market Calmed by Repeated Reassurances; Treasuries and Dollar Also Rise

On April 23 (local time), the three major indices of the New York Stock Exchange closed higher for the second consecutive day. An easing rally unfolded after U.S. President Donald Trump made conciliatory remarks the previous day regarding the U.S.-China tariff war and Federal Reserve (Fed) Chair Jerome Powell. On this day, U.S. Treasury Secretary Scott Besant also commented that there is an opportunity for a 'big deal' between the two countries, working for the second day in a row to calm market anxieties.

Reuters Yonhap News

In the New York stock market, the blue-chip Dow Jones Industrial Average (Dow) closed at 39,606.57, up 419.59 points (1.07%) from the previous trading day. The large-cap S&P 500 index rose 88.1 points (1.67%) to 5,375.86, while the tech-heavy Nasdaq index jumped 407.63 points (2.5%) to finish at 16,708.05.

President Trump's moderate message drove the stock rally. The previous day, he expressed optimism about the U.S.-China tariff negotiations and made it clear that he had no intention of dismissing Chair Powell. President Trump said negotiations with China were "going well," and that the current tariff rate of 145% was "too high" and would "come down significantly." Regarding Chair Powell, whom he had pressured just a day earlier to lower interest rates, Trump said, "I have no intention of firing him," adding, "I just hope he will be more proactive in cutting rates," taking a step back. Analysts noted that as the U.S.-China tariff war escalated into a hardline standoff and "Powell bashing" led to simultaneous declines in U.S. stocks, bonds, and the dollar, the administration moved to soothe the markets.

Additionally, the Wall Street Journal (WSJ) reported that President Trump is considering lowering the additional tariffs imposed on China during his second term from the current cumulative 145% to between 50% and 65%. While the White House and Secretary Besant dismissed the possibility of a unilateral U.S. tariff reduction, they mentioned that both sides could lower tariffs simultaneously. Meeting with reporters in Washington, D.C., Secretary Besant said there had been "absolutely none" when asked if President Trump had proposed a tariff cut on China. "As I have said many times, the current tariff levels are not sustainable for either side. So it would not be surprising if both sides reduced tariffs in a reciprocal manner," he said. At a prior event, he stated, "There is a 'big deal' opportunity between the U.S. and China," and called on China, "If you want (trade) rebalancing, let's do it together." The previous day, he had also said the U.S.-China tariff war was unsustainable and that "the situation will ease in the very near future."

The stock market gave up some of its early gains during the session, but a series of conciliatory statements from the Trump administration regarding the U.S.-China tariff war provided relief to the market.

Keith Buchanan, portfolio manager at Globalt Investments, said, "Signs that U.S.-China tensions are easing on trade are exactly what the market has been hoping for," adding, "The market is feeling a sense of relief." He continued, "We hope the worst is behind us, but we have not yet reached the final stage."

As signs of easing in the U.S.-China tariff war calmed investor anxiety, not only stocks but also U.S. Treasury prices and dollar selling pressure stabilized. Yields, which move inversely to bond prices, declined, especially for ultra-long-term bonds. The yield on the 30-year U.S. Treasury note fell 4 basis points (1bp=0.01 percentage points) from the previous day to 4.83%. The benchmark 10-year U.S. Treasury yield, which serves as a global bond rate benchmark, hovered around the previous day’s level of 4.38%. The dollar index, which measures the value of the U.S. dollar against six major currencies, rose 1.05% from the previous day to 99.73.

However, it is expected that extreme volatility, with the stock market rising and falling depending on tariff developments, will continue going forward.

Brent Schutte, Chief Investment Officer (CIO) at Northwestern Mutual Wealth Management, said, "It's simply a matter of perception as to whether tensions are high or not," adding, "In the coming months, we will see trade tensions escalate and then ease, and until we can get a clearer sense of the actual future, we will encounter more of these (volatile) phenomena."

The Fed released its economic conditions report on this day, noting that tariff uncertainty is increasing. According to the Fed's Beige Book, companies are hesitating to hire and are shortening product pricing cycles due to tariff policies. Expectations of rising inflation have also intensified. It was also revealed that, ahead of the full implementation of tariffs, consumers engaged in "stockpiling" behavior, particularly for automobiles and some durable goods.

By stock, U.S. electric vehicle maker Tesla surged 5.37%. Although its first-quarter earnings released the previous day were weak, CEO Elon Musk announced he would significantly reduce his duties as head of the Department of Government Efficiency (DOGE) starting next month, and an easing of tariff concerns acted as a catalyst for the stock's rise. Nvidia and Apple, which have high exposure to the Chinese market, jumped 3.86% and 2.43%, respectively. U.S. aircraft manufacturer Boeing soared 5.99% after reporting first-quarter losses that were smaller than market expectations.