By Gunjan Banerji

Another day of big gains on Wall Street left investors saying one thing seems certain: The stock market's frenzied swings are here to stay.

President Trump's softer stance on the Federal Reserve and trade with China sent share prices surging for a second consecutive session Wednesday, continuing a dizzying stretch for financial markets that has lifted major indexes well off their lows of the year.

The trade war's swings -- both higher and lower -- have left many investors on edge. The S&P 500 has gained or lost at least 1% in seven of the past 10 sessions and April is poised to be the most-volatile calendar month since the Covid crash in 2020, according to Dow Jones Market Data.

Many are betting that the mammoth moves for stocks will continue, given how sensitive investors across Wall Street are right now to morsels of news tied to tariff developments. That means moves higher might be as jarring as the slides.

"People are on alert for the next headline," said Chris Hentemann, chief investment officer of 400 Capital Management. "Whether it turns out to be a very big up day or a very big down day, it really limits people's ability to have confidence to have capital out."

The S&P 500 jumped 1.7%, while the tech-heavy Nasdaq Composite gained 2.5%. The Dow Jones Industrial Average soared more than 1,000 points, then pared that climb to close up 419.59 points, or 1.1%.

The gains were broad-based, lifting everything from technology behemoths to banks. Moves for some individual stocks were even more dramatic, and shares of companies such as Boeing, Intel and Super Micro Computer jumped more than 5% apiece. Tesla shares added 5.3%, even after the company reported late Tuesday that net income slid 71% in the first quarter and Elon Musk said he would pull back from his work in the Trump administration.

The volatility hasn't been limited to traditional trading hours, from 9:30 a.m. to the closing bell at 4 p.m.

The good news for investors started trickling in late Tuesday when Trump said he didn't plan to fire Federal Reserve Chair Jerome Powell. Anxiety about the central bank's independence had helped send stocks tumbling to start the week, and many were relieved that Trump said wouldn't try to oust Powell, whose term ends next year. Almost immediately, futures tied to major indexes started rising in evening trading.

Stocks got another boost Wednesday after The Wall Street Journal reported that the White House is considering cutting tariffs on Chinese imports by up to half in some cases to de-escalate trade tensions with one of the country's major trade partners. Treasury Secretary Scott Bessent told a room full of representatives from the finance industry that, despite Trump's trade war, the U.S. wants to work with its allies.

The comments helped assuage investors who have been rattled by a nearly nonstop stretch of developments that threatened to dent the strong U.S. economy. Though the U.S. still has to negotiate trade agreements with dozens of countries around the world, for now the worst-case scenario that many investors feared after "Liberation Day" seems to have dissipated.

Highlighting the volatility, however, stocks pared their early surge after the administration said there would be no unilateral reduction in tariffs against China. With markets hanging on every announcement, investors say they remain wary stocks could still retest their lows of the year.

Dev Kantesaria, founder of Valley Forge Capital Management, said he views Trump's messaging on tariffs as part of a "longer-term negotiation."

"He's a consummate negotiator," Kantesaria said. "I don't let the short-term news take me away from understanding the bigger picture."

Many others, from Wall Street to day-trading hobbyists, have remained invested through the ups and downs. And with this week's rally, the S&P 500 has cut its losses for the year to 8.6% from around 15% at its low.

Investors also hit pause on the "Sell America" trade that has triggered punishing selloffs spanning American assets. Longer-term Treasury prices rose, dragging 10-year yields down for the second consecutive day, to 4.385%. And the WSJ Dollar Index held broadly steady, after regaining some ground Tuesday. An exchange-traded fund tracking stocks around the world, the Vanguard Total International Stock ETF, rose around 0.5%, lagging behind the S&P 500.

Still, options traders are betting on a move of 1% or more, higher or lower, in the S&P 500 index for every session through at least May 23, according to a Monday note from Citigroup strategists.

Those moves are expected to be higher on days of economic importance: Options are pricing in a swing of 1.8% in the benchmark index when the April jobs report is released, and a move of 1.7% the day of Powell's postmeeting press conference in May.

"We'd expect to see further violent upside rips as investors anchor and extrapolate from the latest data point," wrote Wolfe Research analysts in a note to clients.

Write to Gunjan Banerji at gunjan.banerji@wsj.com

(END) Dow Jones Newswires

April 23, 2025 17:02 ET (21:02 GMT)

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