By Hannah Erin Lang

Trade tensions between the U.S. and China sent stocks on another roller-coaster ride Tuesday, with the Dow Jones Industrial Average cinching its biggest intraday comeback since April.

Stocks slid when the market opened, after Beijing effectively sanctioned U.S. units of a South Korean shipbuilding giant. China said the Hanwha Ocean subsidiaries supported the U.S. government and hurt Chinese firms' interests.

The major stock indexes began to pare those losses after a U.S. official signaled that trade relations between the two economies weren't spiraling, and extended their gains after Federal Reserve Chair Jerome Powell made comments that raised expectations that more interest-rate cuts were coming.

Then, with less than 30 minutes before markets closed, stocks pulled back again after a social-media post by President Trump warned that the U.S. was considering retaliating against China for not ordering American soybeans.

The Dow industrials closed 0.4% higher, up 203 points, while the S&P 500 fell 0.2%. The Russell 2000, a benchmark for smaller U.S. stocks, marched 1.4% higher to close at a record. For the Russell 2000, it was the biggest intraday comeback -- as measured by the percentage change from its intraday low to any closing gains -- since September 2024.

Flare-ups between the two countries have spurred big stock swings in recent days. The S&P fell 2.7% on Friday after Trump posted on social media threatening "a massive increase in tariffs" on Chinese products. Then the president posted again over the weekend, assuring "it will all be fine," and stocks bounced back Monday.

With equity valuations hovering near historic highs, some money managers said the market was primed for a pullback.

"An announcement like this is one of those events that could lead to negative price action," said Richard Saperstein, chief investment officer at New York-based Treasury Partners. "We're talking about a trade war between the world's two largest economies."

Those concerns continued to weigh on the market's biggest tech stocks. The Nasdaq dropped 0.8% on Tuesday, and shares of Nvidia and Intel were among the biggest losers in the S&P 500. Global equities mostly fell, with the Nikkei logging its worst day since April.

Investors also digested a flurry of third-quarter earnings from Wall Street. Goldman Sachs, JPMorgan Chase and Wells Fargo posted better-than-expected results, while BlackRock's assets under management topped $13 trillion for the first time. Shares of JPMorgan and Goldman Sachs dipped, a sign of the high bar investors have set heading into this earnings season.

"Expectations are still pretty high," said Thomas Martin, senior portfolio manager at Globalt Investments. "When companies don't meet those expectations, even when they report good numbers, those stocks can be sold."

Corporate earnings reports may be especially crucial in the coming weeks, given that regularly scheduled economic-data releases on inflation and the labor market have been delayed due to the government shutdown.

Federal Reserve Chair Jerome Powell said Tuesday the economy still appears to be in stable shape, despite the lack of updated data.

"Based on the data that we do have, it is fair to say that the outlook for employment and inflation does not appear to have changed much since our September meeting four weeks ago," Powell said. However, he added in response to a question about the shutdown: "We'll start to miss that data, particularly the October data, if this goes on for a while."

On the economy, Powell reiterated themes from recent comments, saying "there is no risk-free path for policy as we navigate the tension between our employment and inflation goals."

Some on Wall Street view the wild swings of the past few days as proof that investors have grown too glib about trade risks. Since April's tariff turmoil, stocks have rocketed to fresh records and volatility has plummeted.

"Markets have gotten very complacent regarding risk over the past three or four months," said Kristian Kerr, head of macro strategy for LPL Financial. "It was a clear warning sign that when you get into that type of environment...it doesn't take much to get a volatility shock."

Write to Hannah Erin Lang at hannaherin.lang@wsj.com

(END) Dow Jones Newswires

October 14, 2025 16:57 ET (20:57 GMT)

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