The S&P 500 closed higher Tuesday, clawing back losses from a day earlier after Treasury Secretary Scott Bessent stokes hopes for a possible de-escalation in the U.S.-China trade war.

At 4:00 p.m. ET (21:00 GMT), the Dow Jones Industrial Average rose 1016 points, or 2.7%, the S&P 500 index gained 2.5%, and the NASDAQ Composite climbed 2.7%.

Bessent tees up hopes of U.S.-China trade deescalation

U.S. Treasury Secretary Scott Bessent reportedly said that he expects de-escalation in the ongoing tariff standoff between the US and China in the "very near future, CNBC reported, citing individuals present at the event.

"The next steps with China are, no one thinks the current status quo is sustainable” with tariff rates at their current levels," Bessent said at a private investor summit hosted by JPMorgan Chase (NYSE:JPM) & Co. (NYSE:JPM), CNBC reported, citing sources. The Treasury Secretary said he expects there will be a de-escalation” in the U.S.-China trade war in the “very near future,” a person in the room told CNBC.

The remarks come on the heels of a Bloomberg report. citing individuals present at the event, that the Treasury Secretary anticipates a de-escalation in the situation.

Fed speakers, meanwhile, continued to rise concern about the impact of tariffs. Minneapolis Federal Reserve President Neel Kashkari flagged worries about a tariff-driven recession following a sharp turn lower in economic confidence in the wake of President Donald Trump’s tariff rollout.

Richmond Fed president Thomas Barkin, however, delivered remarks that were in sharp contrast to those of his colleagues on inflation, saying that inflation expectations may have "loosened." This suggests that the Richmond Fed president’s focus could be on the other Fed’s mandate maximum employment pointing to possible backing of rate cuts if the labor market deteriorates.

Earnings continue to flow

The quarterly earnings season continued apace Tuesday.

Verizon Communications (NYSE:VZ) stock rose 0.6% after the telecom giant reported that retail phone customers slipped by more than expected, as it backed away from promotions to attract customers to help protect profits.

3M Company (NYSE:MMM) stock rose 8% after the industrial conglomerate reported first-quarter 2025 results that exceeded analyst expectations, driven by organic sales growth and improved margins.

Halliburton Company (NYSE:HAL) stock fell 5.6% after the oilfield services provider posted lower first-quarter profit as a slowdown in drilling activity in North America dampened demand for its services and equipment.

Northrop Grumman (NYSE:NOC) stock slumped nearly 13% after the aerospace and defense firm slashed its annual profit outlook and missed first-quarter earnings estimates by a wide margin.

Kimberly-Clark (NYSE:KMB) stock fell more than 1% after the consumer goods company slashed its annual profit forecast, warning that the broad-based trade tariffs would push up its supply-chain costs.

GE Aerospace (NYSE:GE), meanwhile, climbed 6% as better-than-expected quarterly earnings offset revenue that just missed of Wall Street expectations.

Amazon (NASDAQ:AMZN), up more than 3%, clawed back some losses from a day earlier, when the tech giant said it would be pausing some investment into new data centers.

Additionally, Tesla (NASDAQ:TSLA),will release its latest numbers after the close - the first of Wall Street’s so-called Magnificent Seven to report this earnings season.

Analysts are bracing for a negative quarter, as Tesla grapples with tepid demand and a backlash to CEO Elon Musk’s political activities.

Sales at Tesla have slumped as the firm deals with increased competition and controversy over Musk’s close proximity to Trump. Musk has helmed the so-called Department of Government Efficiency, or DOGE, which has been tasked by the White House with helping cut the size of the federal government.

Against this backdrop, investors will likely be keen for Musk to provide more details on the roll-out of a more affordable vehicle launch and plans for Tesla’s much-hyped robotaxi business.

(Peter Nurse, Ambar Warrick contributed to this article.)