U.S. stocks closed sharply higher on Tuesday on optimism that trade tensions between the United States and China could de-escalate in the coming days, while President Donald Trump said he has no immediate plans to fire Federal Reserve Chairman Jerome Powell. All three major indexes ended in positive territory.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) jumped 2.7% or 1,016.57 points, to close at 39,186.98 points, snapping its fourth consecutive session of losses.   

The S&P 500 rose 2.5% or 129.56 points to end at 5,287.76 points. Financials, consumer discretionary, tech and utility stocks were the biggest gainers. 

The Technology Select Sector SPDR (XLK) rose 2.4%, while the Consumer Discretionary Select Sector SPDR (XLY) rallied 3.2%. The Utilities Select Sector SPDR (XLU) and Financials Select Sector SPDR (XLF) added 2.7% and 3.3%, respectively. All 11 sectors of the benchmark index ended in positive territory.

The tech-heavy Nasdaq climbed 2.7% or 429.52 points to finish at 16,300.42 points.  

The fear-gauge CBOE Volatility Index (VIX) was down 9.61% to 30.57. Advancers outnumbered decliners on the NYSE by a 6.4-to-1 ratio. On Nasdaq, a 4.5-to-1 ratio favored advancing issues.  A total of 15.21 billion shares were traded on Tuesday, lower than the last 20-session average of 18.94 billion.

Trade War Fears Ease 

Stocks rallied on Tuesday, recovering all the losses from the previous trading session as fears of an escalation in the trade war eased. The jump came after Treasury Secretary Scott Bessent told a group of investors that there are high chances of “de-escalation” in the trade war with China. 

This sent stocks on a rally, which was fueled further after Trump said that he had no plans of firing Powell from his role as the central bank chief. Trump, over the past week, had criticized Powell for not initiating interest rate cuts and called for his firing. 

Trump also said that he would be nice in negotiations with China. Tuesday’s rally was led by tech stocks. Shares of Amazon.com, Inc. (AMZN) jumped 3.5%, while Microsoft Corporation (MSFT) rose 2.1%. Microsoft has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Earnings Season Gathers Pace

The first-quarter earnings season has started and is expected to gather pace this week, with quite a few big names scheduled to report quarterly results. Shares of multi-sector conglomerate 3M Company (MMM) jumped 8.1% after the company reported first-quarter 2025 earnings of $1.88 per share, surpassing the Zacks Consensus Estimate of $1.77 per share. 

Shares of Kimberly-Clark Corporation (KMB) declined despite the company beating earnings estimates. Kimberly-Clark reported first-quarter 2025 earnings of $1.93 per share, beating the Zacks Consensus Estimate of $1.89 per share. 

No major economic data was released on Tuesday. 

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