S&P 500: Tesla Earnings in Focus After Strong Session for Apple and 3M

Wall Street Rallies on Earnings and Trade Talk Relief After Monday’s Fed-Induced Drop

U.S. stocks rebounded sharply Tuesday following a broad selloff triggered by President Trump’s attacks on Federal Reserve Chair Jerome Powell. Traders shifted their focus to corporate earnings and a potential thaw in U.S.-China trade tensions. The Dow briefly surged over 1,000 points before paring gains, while the S&P 500 recovered ground lost Monday but remains more than 14% below its February high.

A Bloomberg report citing Treasury Secretary Scott Bessent’s remarks to investors provided relief. Bessent acknowledged the tariff conflict with China was “unsustainable” and suggested that de-escalation is likely. That helped temper fears sparked by Trump’s ongoing pressure campaign against Powell, which has cast doubt on the Fed’s policy independence and interest rate path.

Consumer Discretionary and Technology Stocks Drive the Rebound

The consumer discretionary sector led the rally with a 2.61% gain, powered by a 5.2% spike in Tesla ahead of earnings and a broad move into retail and automotive names. Technology followed closely, adding 1.61%, as megacaps recovered from Monday’s drop. Nvidia rose 1.9%, while Apple climbed 2.8%. Traders rotated into these growth-heavy names on hopes that Fed policy might remain accommodative under political pressure.

Energy stocks rose 1.76% as oil prices stabilized, while financials added 2.28% on improving risk sentiment. Industrials gained 0.85%, helped by 3M’s 6.9% surge after it beat Q1 earnings estimates. However, RTX dropped 8.9% after warning of an $850 million tariff hit, and Northrop Grumman plunged 11.75% following a sharp profit decline.

Federal Reserve Tensions and Economic Forecasts Weigh on Market Confidence

While equities bounced, underlying uncertainty persists. The IMF cut its U.S. growth outlook to 1.8% for 2025, citing policy risks. Citigroup now sees a 40%–45% chance of recession, reinforcing the cautious tone among institutional investors.

Trump’s repeated criticisms of Powell, including calling him “Mr. Too Late” and suggesting termination, have rattled confidence in Fed autonomy. Legal experts say Powell cannot be removed, but the political pressure alone is disrupting expectations for stable monetary policy. Traders are also wary of how long the Fed can resist external influence while inflation remains above target.

Traders Should Brace for Continued Volatility Ahead of Fed Remarks and Tech Earnings

The short-term outlook points to continued volatility. With more Fed commentary due this week, traders are on alert for any signals about future rate cuts or changes in policy stance. Markets remain reactive to both economic headlines and political developments, making risk management essential.

Earnings from major tech players, starting with Tesla, will offer key insight into how the largest stocks are handling slower growth and global trade friction. Unless there’s a material breakthrough in U.S.-China talks or clarity from the Fed, upside in equities may be capped and prone to sharp pullbacks.

More Information in our Economic Calendar.