By Krystal Hur

Surging shares of big tech firms and trade-sensitive companies sent the Dow Jones Industrial Average up more than 1,000 points on Tuesday, helping markets recover after a bruising start to the week.

The rally continued the most turbulent stretch for stocks since the Covid crash, with the S&P 500 and Nasdaq Composite volatility on pace for its highest calendar month since March 2020, according to Dow Jones Market Data. Tuesday's rise came despite the International Monetary Fund slashing its U.S. and global economic forecasts.

The mayhem has divided investors scrambling to navigate the market upheaval. Some jittery investors piling into a "Sell America" trade have dumped U.S. stocks, bonds and the dollar, threatening to upend America's financial primacy and so-called exceptionalism that had market watchers optimistic about U.S. growth prospects earlier this year. Other traders have dived headfirst into the market carnage to snap up beaten-down stocks.

"It's really hard to watch as an investor and as a manager of assets. You can't really trade this, to a certain degree," said Ayako Yoshioka, portfolio consulting director at Wealth Enhancement. "If you're following the news and trying to make longer-term decisions, it is a little unnerving."

On Tuesday, investors saw some reprieve from the market's recent selloffs. The tech-heavy Nasdaq jumped 2.7%, leading the session's gains. The Dow Jones Industrial Average rose nearly 2.7%, or 1016.57 points, and the S&P 500 gained 2.5%.

Traders were cheered by optimism from the White House on tariff negotiations. Treasury Secretary Scott Bessent said at an investor summit that he expects the trade war with China to de-escalate and believes a deal can be reached, according to people in the room for his remarks. Bloomberg reported the news earlier.

Financials were the biggest gainers among the S&P 500's sectors. Consumer discretionary stocks, among the hardest hit this year due to their exposure to import duties, trailed closely behind, climbing 3.2%. Home builder Lennar's shares rose 4.1%, McDonald's gained 3.4% and DoorDash rose 2.8%.

Big tech shares also rallied. The Magnificent Seven stocks -- Alphabet, Amazon.com, Apple, Meta Platforms, Microsoft, Nvidia and Tesla -- all added more than 2%.

The bounceback came despite fresh fallout from Trump administration tariffs that have knocked the Dow so far this month to its worst April since 1936, according to DJMD.

The International Monetary Fund slashed its U.S. and global economic forecasts, warning that tariffs were ushering in a new era of slower growth. U.S. economic growth in 2025 is now projected at 1.8%, down from the fund's 2.7% forecast in January.

Goldman Sachs Chief Executive David Solomon said uncertainty was "too high," holding back corporate decision-making and keeping asset prices under pressure. And the IIF, a finance-industry trade group, said the U.S. faced a likely recession later this year.

Defense contractor RTX said it was bracing for an $850 million financial hit, while Huggies maker Kimberly-Clark said a shifting "global geopolitical landscape" was partly to blame for a lower profit outlook.

Gold, meanwhile, retreated after surging early Tuesday to a new record high above $3,500 a troy ounce. The precious metal, coveted in times of uncertainty and stress, has cemented its status as the undisputed winner from this month's tariff-fueled market turmoil.

Jim Lebenthal, chief equity strategist at Cerity Partners, said that he and his colleagues are remaining sanguine that it is just a matter of time before Trump, who ran his presidential campaign on a pro-growth, pro-Wall Street stance, will dial down tariffs to lessen their blow on the economy and markets.

"It's a created crisis," said Lebenthal. "This can be turned around in a man-made fashion as well. It doesn't have to be that we go into some deep, dark recession."

Write to Krystal Hur at krystal.hur@wsj.com

(END) Dow Jones Newswires

April 22, 2025 16:44 ET (20:44 GMT)

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