Dow surges over 1,000 points on potential u.s.-china trade thaw
New York, Tuesday, 22 April 2025.
The Dow Jones Industrial Average rocketed upwards by over 1,000 points today, marking a significant recovery. This surge follows remarks from Treasury Secretary Bessent hinting at a possible de-escalation in the trade war. While u.s. tariffs on Chinese imports stand at a staggering 145%, Bessent suggests the current situation is unsustainable. Investors are reacting optimistically, with the S&P 500 and Nasdaq also experiencing substantial gains. However, UBS strategists caution that the market bottom may not be reached until the third quarter of 2025.
Market overview
The Dow Jones Industrial Average jumped 1,016.57 points, a 2.663 2.66% increase, closing at 39,186.98 [1]. The S&P 500 also saw gains, rising by 2.51% to reach 5,287.76 [1]. The Nasdaq Composite experienced a similar boost, climbing 2.71% to close at 16,300.42 [1]. These increases reflect a broad market recovery driven by optimism surrounding potential trade de-escalation and positive earnings reports [1][2].
Treasury secretary’s remarks
Treasury Secretary Scott Bessent indicated at a JPMorgan Chase event that he anticipates a de-escalation in the trade war between the U.S. and China in the near future [1][5]. Bessent stated that the current tariff situation is unsustainable, suggesting that both sides recognize the need for a resolution [2][5]. White House Press Secretary Karoline Leavitt added to the positive sentiment, noting that the Trump administration is making progress towards a potential trade deal with China [2].
Sector performance and expert analysis
While the broader market rallies, some sectors and companies face unique challenges. The technology sector has underperformed, declining 21% year-to-date, though Barclays strategist Venu Krishna suggests this underperformance may be overdone [1]. RTX shares, for example, plunged over 8% after the company projected potential hits from tariffs, estimating levies could add up to $850 million this year [1]. Conversely, 3M and GE Aerospace saw gains of 8% and 5%, respectively, following strong earnings reports [1].
Investor caution advised
Despite the market’s positive reaction, some experts urge caution. Ritholtz Wealth Management CEO Josh Brown advises against chasing bear market rallies, suggesting that underlying economic uncertainties persist [1]. UBS strategists, including Bhanu Baweja, believe that the market has not yet bottomed out and anticipate further adjustments due to the impact of tariffs on earnings growth [1]. BCA Research estimates that tariffs could reduce S&P 500 net margins by two percentage points [1].
Other market movements
Beyond equities, other asset classes also experienced notable movements. Bitcoin reclaimed the $90,000 level, rising over 3% on the day [1]. Gold futures reached an intraday all-time high of $3,509.9 [1]. However, not all news was positive; Bank of America cut its price target for Tesla to $305 from $380, and Barclays downgraded Texas Instruments, reducing its price target to $125 from $180 [1]. These mixed signals highlight the complexity of the current investment landscape [alert! ‘differing analyst opinions’] [1].