The Dow Jones Industrial Average climbed 1,073 points, or 2.8%, on Tuesday as optimism grew that trade tensions between the United States and China could soon ease. The S&P 500 gained 2.9% and the Nasdaq Composite rose 3.3%, reversing losses from the prior session.

The rebound followed a Bloomberg report citing unnamed sources that said Treasury Secretary Scott Bessent had described the ongoing trade war as "unsustainable" during a meeting with investors. Bessent also suggested that an agreement with China was possible, according to the report.

Shares of companies closely tied to China, including Nvidia (NVDA, Financials) and Tesla (TSLA, Financials), jumped 6% each after the news. Advanced Micro Devices (AMD, Financials) also recovered earlier losses, rising more than 1%.

The gains helped recover ground lost during Monday's sell-off, when the Dow fell more than 970 points and both the S&P 500 and Nasdaq declined over 2%. Since President Donald Trump announced a round of tariffs on imported goods on April 2, the S&P 500 had been down more than 6% prior to Tuesday's rebound.

As of 1:53 p.m. EDT, the S&P 500 was quoted at 5,237.25, up 79.05 points, or 1.53%.

Investors remain cautious following Trump's recent criticism of Federal Reserve Chair Jerome Powell on Truth Social. Trump referred to Powell as “Mr. Too Late” and a “major loser” and suggested last week that the White House was studying options for his removal. Powell has stated he intends to serve his term through May 2026, maintaining that he cannot legally be dismissed by the president.

Portfolio manager Jed Ellerbroek of Argent Capital Management said the prolonged uncertainty was weighing on market sentiment. "The longer we remain in this limbo, the worse it gets for the economy," Ellerbroek said.

Despite Tuesday's rally, concerns about trade relations, monetary policy independence, and economic growth continue to loom over the market.