New York: The US 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 per cent, 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 per cent, after giving up most of its earlier surge of 1,460 points, while the Nasdaq composite was down 0.2 per cent, as of 1.25pm Eastern time.

Stocks globally had rallied earlier in the day, with indexes up 6 per cent in Tokyo, 2.5 per cent in Paris and 1.6 per cent 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 centred on how long Trump will keep his stiff tariffs on other countries, which would raise prices for US shoppers and slow the economy. If they last a long time, economists and investors expect it 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 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 US, 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 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.

It “seems like we were very oversold and there’s hope that things may de-escalate from here,” said Sameer Samana, a senior global market strategist for Wells Fargo Investment Institute, He, though, also suggested staying cautious “as 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.

Such a bounce back for global markets perhaps shouldn’t be a surprise. Stocks don’t go in one direction forever, and some of the best days in the market’s history have been clustered around some of its worst days.

The biggest gain for the S&P 500 since World War II was an 11.6 per cent surge on October 13, 2008, for example. That was during the depths of the Great Recession, when worries were high that the financial system was collapsing and the S&P 500 was in the midst of a nearly 57 per cent plunge from its peak in late 2007 until its bottom in March 2009. A couple weeks later, the index had another one of its best days in history, soaring 10.8 per cent.

That’s one of the reasons many financial advisers suggest not trying to time the market and selling stocks and other investments meant for the long term when nervous, because of the risk of missing out on such huge up days.

Trump’s trade war is an attack on the globalisation that’s shaped the global economy and helped bring down prices but also caused manufacturing jobs to leave for other countries. He has said he wants to bring factory jobs back to the United States, a process that could take years. Trump also says he wants to narrow trade deficits with other countries.

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 4.23 per cent from 4.15 per cent late Monday and from just 4.01 per cent late Friday.

Yields tend to rise with expectations for the US economy’s strength and for inflation.

AP

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