NEW YORK (AP) — The U.S. stock market is careening through a second straight day of stunning swings Tuesday as uncertainty continues to reign about what whether President Donald Trump will ease up on his trade war, which is scheduled to kick into a higher gear after midnight.
After roaring to an early gain of 4.1%, which put it on track for its best day in years, the S&P 500 quickly lost all of it within a few hours. It was virtually flat in afternoon trading after bouncing between modest gains and losses.
The Dow Jones Industrial Average was up 158 points, or 0.4%, after giving up most of its earlier surge of 1,460 points, while the Nasdaq composite was down 0.2%, as of 1:25 p.m. Eastern time.
Stocks globally had rallied earlier in the day, with indexes up 6% in Tokyo, 2.5% in Paris and 1.6% in Shanghai. But even after those jumps, analysts had been warning to expect more swings up and down for financial markets not only in the days ahead but also the hours.
The big question remains centered on how long Trump will keep his stiff tariffs on other countries, which would raise prices for U.S. shoppers and slow the economy. If they last a long time, economists and investors expect them to cause a recession. But if Trump lowers them through negotiations relatively quickly, the worst-case scenario can be avoided.
Hope still remains on Wall Street that negotiations may be possible, and Trump said Tuesday that a conversation with South Korea's acting president helped them reach the “confines and probability of a great DEAL for both countries."
“Their top TEAM is on a plane heading to the U.S., and things are looking good,” Trump said on social media. “We are likewise dealing with many other countries, all of whom want to make a deal with the United States.”
Japanese stocks led global markets higher after the country’s prime minister, Shigeru Ishiba, appointed his trade negotiator for talks with the United States. It was based on an agreement between Ishiba and Trump, Japanese officials said.
But investors should nevertheless remain cautious, said Sameer Samana, a senior global market strategist for Wells Fargo Investment Institute. He pointed to how “the key countries continue to escalate, rather than de-escalate.”
China said it will “fight to the end” and warned of countermeasures after Trump threatened on Monday to raise his tariffs even further on the world’s second-largest economy.
Trump's latest set of tariffs are scheduled to kick in after midnight, the country's top trade negotiator, Jamieson Greer, said in testimony before a Senate committee Tuesday. He also said Trump has been clear that he does not intend to have any exemptions or exclusions in the tariffs.
The U.S. trade representative said roughly 50 countries have already been in contact, and he's told them: "If you have a better idea to achieve reciprocity and to get our trade deficit down, we want to talk with you, we want to negotiate with you.”
Trump’s trade war is an attack on the globalization that’s shaped the global economy and helped bring down prices for products on store shelves but also caused manufacturing jobs to leave for other countries. Trump has said he wants to narrow trade deficits, which measures how much more the United States imports from other countries than it sends to them as exports.
On Wall Street, health insurers helped lead the market after the Centers for Medicare & Medicaid Services announced a stronger-than-expected increase in Medicare Advantage payments for next year. Humana jumped 8.3%, United Health climbed 5.6% and Elevance rose 1.7%.
In the bond market, Treasury yields rallied for a second straight day to recover more of their sharp losses from prior months. The yield on the 10-year Treasury rose to 4.20% from 4.15% late Monday and from just 4.01% late Friday.
Yields tend to rise with expectations for the U.S. economy’s strength and for inflation. ___ AP Business Writers Matt Ott and Elaine Kurtenbach contributed.