Stocks bounced back on Tuesday after a bruising start to the week, even as investors continued to digest deepening trade tensions and President Trump’s attacks on the Federal Reserve.
The Dow Jones Industrial Average surged more than 800 points after the opening bell on Tuesday — recovering most of Monday’s steep 970-point loss and raising hopes that stocks will break a four-day losing streak.
The S&P 500 and the tech-heavy Nasdaq Composite rose more than 2%.
The market’s rebound comes amid escalating tariffs between the United States and China and growing worries over the independence of the Fed.
On Monday, Trump continued his public campaign against Fed Chair Jerome Powell, calling him “Mr. Too Late” and a “major loser” in a post on Truth Social and accusing him of stalling on rate cuts that Trump claims are necessary to prevent an economic slowdown.
Trump also hinted last week that Powell could be removed from his position–— a highly unusual and legally questionable move that White House economic advisor Kevin Hassett later confirmed is under review.
Powell has publicly stated that he cannot be dismissed and plans to serve through the end of his term in May 2026.
“There’s just so much uncertainty right now with the tariff cycle and with the economy,” Larry Tentarelli, founder of the Blue Chip Daily Trend Report, told CNBC.
“Adding one more layer of uncertainty with Jerome Powell just adds more volatility to the markets overall.”
The broader market has been under pressure since Trump’s April 2 announcement of sweeping “reciprocal” tariffs, a policy shift that has shaken global financial markets.
All three major US indexes have fallen more than 9% since the policy was unveiled, with companies across a range of sectors warning about disruptions to supply chains and rising input costs.
Tuesday’s bounce, however, reflects cautious optimism as investors look ahead to key economic data, including a manufacturing activity survey from the Richmond Fed.
Additionally, speeches from top Fed officials — including Vice Chair Philip Jefferson, Minneapolis Fed President Neel Kashkari, and Fed Governor Adriana Kugler — are expected to provide further insight into the central bank’s outlook.
Meanwhile, rising trade tensions between Washington and Beijing are also taking a toll on individual stocks.
Barclays downgraded semiconductor maker Texas Instruments on Tuesday, warning that tariffs could drive Chinese customers to switch to domestic suppliers.
The downgrade sent Texas Instruments shares down more than 1% in early trading.
Barclays analyst Tom O’Malley lowered the stock’s rating to “underweight” from “equal weight” and slashed its price target from $180 to $125, reflecting over 14% downside potential from Monday’s close.
“Tariffs could push local Chinese customers to move to domestic analog producers over U.S. suppliers who will offer higher prices,” O’Malley wrote.
“China had already initiated a concerted effort to domestically produce both power and analog semiconductors via its China for China strategy implementation and we think they would see more success.”
Trump has imposed tariffs of up to 245% on some Chinese imports.
In retaliation, China recently raised its own tariffs on US goods to 125%, up from the 84% announced earlier this month — raising fears of a prolonged trade war.
While Tuesday’s rally offers some relief, investors remain wary.
The overlapping threats of monetary policy interference, trade retaliation, and political volatility continue to cast a long shadow over market stability.
