Stocks jumped Tuesday as investors digested the latest developments in President Donald Trump’s “Liberation Day” trade war, recovering a portion of the historically bad losses over the last week even as China, the world’s second-largest economy, threatens to “fight to the end” with the U.S. over the soaring import duties.

President Donald Trump is displayed on a television screen as traders work on the floor of the New … More York Stock Exchange.

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Key Facts

All three major U.S. stock indexes rallied shortly after market open: The Dow Jones Industrial Average rose 3.6%, or 1,360 points, the S&P 500 gained 3.4% and the tech-heavy Nasdaq spiked 3.8%.

The recovery came as Wall Street thirsted for any signs the Trump administration would leave the door open for negotiations on the tariffs viewed by many to be devastating to corporate earnings.

Those signs were led by Treasury Secretary Scott Bessent’s comments Tuesday to CNBC’s Squawk Box that he believes “we can end up with some good deals” if other countries come to the table.

Trump signaled more willingness to open trade talks, writing on social media Tuesday morning he had a “great call” with South Korean leader Choi Sang-mok and that “China also wants to make a deal, badly.”

As things stand, Tuesday would be the best daily percentage gain for all three indexes since 2022, but it’s unclear whether it’s a sign of improving sentiment or what’s known as a dead cat bounce in which a financial asset in decline briefly rallies before falling further.

Even after the Tuesday recovery, the Dow is down 7%, or 2,800 points, since Trump’s wide sweeping tariff announcement last Wednesday, and the S&P and Nasdaq have lost 8% apiece over the four trading session span.

But Stock Market Rally Comes As Bonds Sink

Stocks may be recovering – the S&P is up 6% from its Monday low – but Trump has already lost one development he already took a victory lap on last week. Yields for 10-year U.S. Treasury notes, the benchmark to which many borrowing rates are tied to, climbed about 10 basis points to more than 4.2%, higher than they stood prior to Liberation Day, up nearly 40 basis points from their Friday low. Higher yields indicate less valuable bonds as investors sour on the idea of holding U.S. government debt, and the rising 10-year signals borrowing costs are not coming down. The 10-year is almost exactly flat from where it stood at Election Day.

What To Watch For

Trump’s country-by-country tariffs, beyond the 10% universal duties, are scheduled to go into effect at 12:01 a.m. EDT on Wednesday. The White House called a report it was considering a pause, similar to delays on Canada and Mexico tariffs earlier in Trump’s second term, “fake news,” though billionaire Trump donor Bill Ackman officially lobbied for a 30-day or longer pause Tuesday.

China And Scott Bessent War Over Who Is Making ‘mistake’

Trump said Monday he would slap an additional 50% tariff on Chinese imports over the country’s retaliatory tariffs, which the Chinese Commerce Ministry called a “mistake on top of a mistake” which “China will fight to the end.” Bessent, the U.S.’ top economic official, said Tuesday the Chinese response was a “big mistake” and it’s a “losing hand” for the Asian power to engage in a tariff war.

Further Reading

ForbesForbes Recession Tracker: Goldman, JPMorgan Say Recession Incoming If Trump Doesn’t Blink On TariffsBy Derek Saul ForbesWill Trump Negotiate Tariffs? President Orders Talks With Japan And Says He Wants ‘Fair Deals’ With Other CountriesBy Alison Durkee