Stocks rebound, dollar gains; earnings, U.S.-China tariff talks in focus

By Caroline Valetkevitch

NEW YORK (Reuters) -U.S. stocks rebounded on Tuesday from the previous day's selloff as investors focused on earnings, while the dollar rose after U.S. Treasury Secretary Scott Bessent said in a closed-door meeting that he believes there will be a de-escalation in U.S.-China trade tensions.

U.S. Treasury long-term yields dipped after moving higher on Monday.

Bessent also described future negotiations with Beijing as a "slog" that has not started yet, according to a person who heard his closed-door presentation to investors at a JP Morgan conference.

Investor confidence has been shaken by U.S. President Donald Trump's multi-front tariff battles, which investors worry could create severe disruption in world trade and hurt the economy.

The International Monetary Fund on Tuesday slashed its forecasts for growth in the United States, China and most countries, citing the impact of U.S. tariffs now at 100-year highs.

Investors on Tuesday also continued to assess Trump's criticism of the Federal Reserve Chair Jerome Powell. Trump this week criticized Powell for not cutting interest rates, which raised concerns about the president's influence over the central bank and added to concerns about U.S. economic stability.

Trump said last week he believes Powell will leave his job if Trump asks him to do so, although Powell himself has said he would not. It is unclear whether Trump has the authority to fire Powell, though lawsuits over unrelated firings by Trump are being watched as possible proxies.

The first-quarter earnings season for U.S. companies picked up steam. Shares of industrial conglomerate 3M Co were up 8.1% after the company beat first-quarter profit expectations, while it noted a likely hit to 2025 profit from tariffs. Results from Alphabet are due later this week.

In stocks, "overall, the trend is down, but it's not a fire sale, get rid of everything. People are looking for opportunity and pockets of value, which are there," said Oliver Pursche, senior vice president, adviser for Wealthspire Advisors in Westport, Connecticut.

"All of the soft (economic) data points are weakening but the hard data continues to be robust. That's one of the things that investors are grappling with," he said.

Minneapolis Fed President Neel Kashkari said the Fed's monetary policy independence was foundational and the key to better economic outcomes.

The Dow Jones Industrial Average rose 1,016.57 points, or 2.66%, to 39,186.98, the S&P 500 rose 129.56 points, or 2.51%, to 5,287.76 and the Nasdaq Composite rose 429.52 points, or 2.71%, to 16,300.42.

Mega-cap names were up sharply, including Apple, which gained 3.4%. Shares of Tesla were slightly higher in after-hours trading after the company reported first-quarter total gross margin that beat analysts' estimates, while the company missed estimates for first-quarter revenue.

Shares of Coinbase Global were up 8.6% as bitcoin extended recent gains. Bitcoin was up 4.61% to $91,360.62.

MSCI's gauge of stocks across the globe rose 12.25 points, or 1.56%, to 795.36. The pan-European STOXX 600 index ended up 0.25%.

The dollar regained some ground. The U.S. dollar index, which measures the greenback against six other major currencies, was up 0.6% at 98.937, after sinking as low as 97.923 in the previous session, a level not seen since March 2022.

The dollar was up 0.42% at 141.470 yen, after earlier falling below the psychological 140 level for the first time since mid-September.

Fears that Trump's trade policies could lead to a U.S. economic slowdown provided some demand for U.S. government bonds.

Benchmark 10-year yields were last at 4.391%, about one and a half basis points lower than Monday.

Recent weakness in the dollar, along with demand for safe-havens, helped gold hit another all-time high of $3,500.05 earlier in the day. Spot gold was last at $3,425.91 an ounce.

Oil prices ended more than $1 a barrel higher as new U.S. sanctions against Iran and rising stock markets helped spark a recovery.

Brent crude futures rose $1.18, or 1.8%, to settle at $67.44, while the U.S. West Texas Intermediate crude contract for May, which expired on Tuesday's settlement, gained $1.23, or 2%, to close at $64.32. The more actively traded WTI June contract also gained 2% to settle at $63.47.

(Reporting by Caroline Valetkevitch in New York; Additional reporting by Elizabeth Howcroft in Paris and Wayne Cole in Sydney, Editing by Sharon Singleton, Kirsten Donovan, Matthew Lewis and Sandra Maler)