Trading Day: Wall Street extends rebound as trade war fears subside

NEW YORK (Reuters) - Making sense of the forces driving global markets

By Alden Bentley, Americas Finance and Markets Breaking News

Editor.

Jamie is away so I'll provide a round-up of today's main market moves below. I'd love to hear from you, so please reach out to me with comments at alden.bentley@thomsonreuters.com.  

If you have more time to read today, here are a few articles I recommend to help you make sense of what happened in markets.

1. White House would consider cutting China tariffs as partof talks, source says 2. Bessent says China tariffs are not sustainable as USsignals willingness to de-escalate 3. Americans sour on Trump's handling of the economy,Reuters/Ipsos poll finds 4. Investors relieved Musk will refocus on Tesla, but worryabout brand damage 5. Citadel's Griffin says Trump needs to be careful aboutTreasuries' brand 6. Wall St rallies on tariff optimism, Trump eases Powellthreats 7. Tariffs restrain US business activity, boost askingprices for products

Today's Key Market Moves

* The S&P 500 closes up 1.79%, the Nasdaq Composite ends2.61% higher and Dow Jones Industrial Average rises 1.22%. * The dollar rises 1.2% against the yen, trading at 143.28,near an eight-day high. The euro falls 0.84%. * Gold closes down 2.6%. * The 10-year Treasury note yield eases 0.8 basis point to4.3812%. * Brent crude oil falls 2% to $66.05 a barrel. * The pan-European STOXX 600 index rises 1.78%, whileEurope's broad FTSEurofirst 300 index rises 1.75%. * MSCI's broadest index of Asia-Pacific shares outside Japancloses 1.99% higher, while Japan's Nikkei rises 1.89%.

Wall Street extends rebound as trade war fears subside

The bounce in U.S. stocks gained momentum on Wednesday as the Trump administration turned down the heat on its trade war with China that has so rattled markets, while the president distanced himself from his own calls for the immediate termination of Federal Reserve chair Jerome Powell.

At one point Wall Street's indexes were up more than 3%, with the S&P 500 hitting a two-week high, after a Wall Street Journal report cited a senior White House official as saying that U.S. tariffs on China were likely to come down to between roughly 50% and 60%.

There was talk of short covering even as investors were loathe to buy into a full-recovery scenario. They remain distrustful after the selloff on U.S. President Donald Trump's on-again, off-again tariff declarations since April 2 earned the Nasdaq a bear-market label, the S&P 500 nearly so, and sent investors rushing out of dollar-based assets like Treasury bonds, which had been trusted safe-havens.

Late Tuesday, Trump dialed back his attacks on the Fed chief, which helped futures build on a recovery.

"I have no intention of firing him," Trump said at the Oval Office. "I would like to see him be a little more active in terms of his idea to lower interest rates."

Trump had threatened to remove Powell, who is widely viewed as a stabilizing force in the market, just as his chaotic trade policy most required a disciplined Fed.

It also helped that Tesla shares jumped almost 6% after CEO Elon Musk said he would significantly scale back his work with the Trump administration to devote more time to running his companies. Even so, the electric carmaker posted a 71% plunge in quarterly net profit.

The market seems to welcome any distraction from Trump headlines, if only so it can focus on earnings as the first quarter reporting season gets into full swing. Boeing shares also surged after the planemaker reported a smaller-than-expected quarterly loss.

The dollar found a footing, rising to an eight-day high versus the yen and a seven-day high on the euro. The benchmark 10-year Treasury note tried to rally, pushing the yield down to its lowest since April 8, but faded with the yield off just 0.6 bp in late trade.

What could move markets tomorrow?

* South Korea GDP (Q1) * Japan foreign stocks and bonds investment * Tokyo CPI (April) * U.S. earnings: Merck, Procter & Gamble, Bristol-MyersSquibb, Alphabet * U.S. seven-year Treasury note auction * U.S. durable goods orders (March)

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

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(By Alden Bentley; Editing by Nia Williams)