By Caroline Valetkevitch
NEW YORK (Reuters) -Major stock indexes rallied, the dollar gained against the euro and other currencies while safe-haven gold dropped on Wednesday as the Trump administration signalled a willingness to de-escalate its trade war with China.
U.S. Treasury Secretary Scott Bessent said that high tariffs between the United States and China are not sustainable.
U.S. President Donald Trump told reporters the U.S. is “going to have a fair deal with China,” but did not outline any specifics.
Adding to the upbeat market tone, Trump late Tuesday backed off from threats to fire Federal Reserve Chair Jerome Powell.
“There seems to be some light at the end of the tunnel here in terms of the trade war,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
Trump’s multi-front tariff war has roiled markets in recent weeks as investors worried it would push the economy into recession, while his criticism of Powell has added to investor concerns about U.S. assets.
Some earnings news in the U.S. and elsewhere also buoyed stocks on Wednesday. Boeing shares were up 6.6% after the company reported a smaller-than-expected quarterly loss.
The Dow Jones Industrial Average rose 426.71 points, or 1.09%, to 39,612.42, the S&P 500 rose 91.83 points, or 1.73%, to 5,379.12 and the Nasdaq Composite rose 457.34 points, or 2.79%, to 16,755.85.
Shares of Tesla jumped 8.1% even though the company reported results that missed analyst forecasts. Tesla boss Elon Musk said on a call with analysts he would significantly reduce his involvement in work at the Department of Government Efficiency from next month to focus more on his many companies.
MSCI’s gauge of stocks across the globe rose 11.56 points, or 1.45%, to 807.82. The pan-European STOXX 600 index ended up 1.78%.
After hitting record highs in recent sessions, spot gold slipped 3% to $3,281.6 an ounce.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro,rose 0.32% to 99.88, with the euro down 0.88% at $1.1319.Against the Japanese yen, the dollar strengthened 1.32% to 143.45.
Citadel’s founder and CEO Kenneth Griffin said on Wednesday that Trump’s administration needs to be careful about potential damage to the creditworthiness of U.S. Treasuries.
Investors have been worried that White House pressure to cut interest rates would risk fuelling inflation just as Trump’s tariffs jack up prices.
U.S. Treasury benchmark yields were little changed.
The yield on benchmark U.S. 10-year notes was flat at 4.389% from late on Tuesday.
Oil was lower, with U.S. crude falling $1.40 to settle at $62.27 a barrel, while Brent crude declined $1.32 to settle at $66.12.
(Additional reporting by Amanda Cooper in London and Wayne Cole in Sydney and Purvi Agarwal; editing by Tom Hogue, Bernadette Baum, Gareth Jones, Mark Heinrich and Cynthia Osterman)
