US stocks close higher; oil drops amid recession fears, trade talks

By Stephen Culp

NEW YORK (Reuters) -Wall Street stocks advanced on Tuesday while crude and gold prices slid as investors juggled corporate earnings, signs of progress in U.S. President Donald Trump's tariff negotiations, and increased odds of a global recession.

All three major U.S. stock indexes were modestly higher, with the blue-chip Dow out front.

The S&P 500 notched its sixth straight session of gains.

Canada's election served a rebuke to Trump's bruising trade policies and comments about annexing the nation to become the 51st U.S. state.

"Canada made a major statement; it's not going to roll over to Trump," said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York. "They are going to be very tough on trade issues."

U.S. Treasury Secretary Scott Bessent said on Tuesday tariff talks are ongoing, and that the onus of U.S.-China trade negotiations fell on Beijing and he did not expect supply chain disruption from trade disputes.

The Trump administration has taken measures to reduce the impact of automotive tariffs on foreign parts used in U.S.-manufactured cars. China has exempted ethane from its 125% tariff on U.S. imports, two sources familiar with the matter said, in the latest sign that the tariff situation is fluid.

"The markets have been kind of weak, aimless, directionless at the beginning of the day and then you see discussions or bullet points come out from the White House and the market moves," said Chris Wolfe, chief investment officer at Pennington Partners in Bethesda, Maryland.

"I really think it just shows that we're really tied to watching politics and policy evolve in real time," Wolfe added. "The focus is, I think, rightly so on the tariffs and potential deals and tariff reductions."

First-quarter reporting season is shifting into overdrive this week with high-profile releases from four of the "Magnificent Seven" group of artificial intelligence-related megacap stocks - Meta Platforms, Microsoft, Apple and Amazon.com.

On the economic front, consumer confidence soured more than expected and job openings dropped 3.9%.

The Dow Jones Industrial Average rose 300.03 points, or 0.75%, to 40,527.62, the S&P 500 rose 32.07 points, or 0.58%, to 5,560.82 and the Nasdaq Composite rose 95.19 points, or 0.55%, to 17,461.32.

European shares extended their rally to a sixth consecutive day with support from bank earnings as investors focused on how companies are gauging the impact of U.S. tariffs.

MSCI's gauge of stocks across the globe rose 4.21 points, or 0.51%, to 831.42.

The pan-European STOXX 600 index rose 0.36%, while Europe's broad FTSEurofirst 300 index rose 7.36 points, or 0.35%. Emerging market stocks rose 3.79 points, or 0.34%, to 1,106.36. MSCI's broadest index of Asia-Pacific shares outside Japan closed higher by 0.33%, to 575.69, while Japan's Nikkei rose 134.25 points, or 0.38%, to 35,839.99.

The dollar gained after Bessent's comments on progress in trade talks, and the prospect of additional tariff deals, but the greenback remained on pace for the biggest monthly drop against the euro since November 2022.

Canada's loonie softened against the dollar as Canadian Prime Minister Mark Carney's Liberals retained power in Monday's election.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.2% to 99.23, with the euro down 0.35% at $1.1381.

Against the Japanese yen, the dollar strengthened 0.2% to 142.32.

Sterling weakened 0.27% to $1.3402.

The Mexican peso strengthened 0.18% versus the dollar at 19.559.

The Canadian dollar weakened 0.06% versus the greenback to C$1.38 per dollar.

The U.S. 10-year Treasury yield fell for the sixth straight day to a three-week low on the heels of weaker-than-expected economic data.

The yield dropped 4.6 basis points to 4.17%, from 4.216% late on Monday.

The 30-year bond yield fell 5 basis points to 4.6431% from 4.693% late on Monday.

The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 2.9 basis points to 3.656%, from 3.685% late on Monday.

Oil prices slid on fears of a global recession and dampening demand due to Trump's trade war.

U.S. crude fell 2.63% to settle at $60.42 per barrel, while Brent settled at $64.25 per barrel, down 2.44% on the day.

Gold prices dipped in opposition to the dollar's gain.

Spot gold fell 0.59% to $3,321.54 an ounce. U.S. gold futures fell 0.47% to $3,317.40 an ounce.

(Reporting by Stephen Culp; additional reporting by Dhara Ranasinghe in London and Tom Westbrook in Singapore; editing by Mark Heinrich and Richard Chang)