Stocks bounced on Tuesday as market participants looked to recover from the previous session's steep sell-off. Still, investor sentiment is shaky as uncertainty grows around the health of the U.S. economy following President Donald Trump's criticisms of Federal Reserve Chair Jerome Powell.
The Dow Jones Industrial Average rose over 1,000 points, as investors bought back into stocks at a discount after the blue-chip average sunk more than 970 points lower on Monday. The S&P 500 Index and tech-heavy Nasdaq Composite also climbed more than 2.5% higher.
Here's how the market settled on Tuesday:
S&P 500 Index
Dow Jones Industrial Average
Nasdaq Composite Index
Wall Street was impacted by comments from Trump on his social media platform Truth Social on Monday, calling Powell "Mr. Too Late" and "a major loser," and demanding for the central bank to cut interest rates. These terse remarks further escalated tensions between the White House and the Federal Reserve, and added to investor concerns surrounding the indepence of the central bank.
The International Monetary Fund (IMF) on Tuesday cut its 2025 growth forecast in April, citing the impact of tariffs on the global economy and calling Trump's trade policies a "negative shock to growth."
The IMF's new outlook released in the April 2025 World Economic Outlook report includes a forecasts for global economic growth and inflation based on data available as of April 4 -- this would include Trump's so-called "reciprocal" tariffs announced April 2 but excludes further changes like the 90-day pause on most higher rates and the exemptions for electronics.
"The April 2 Rose Garden announcement forced us to jettison our projections -- nearly finalized at that point -- and compress a production cycle that usually takes more than two months into less than 10 day," Pierre-Olivier Gourinchas, chief economist at the IMF, wrote in the report, adding that "tariffs are a negative supply shock for the economy imposing them."
The IMF now sees the U.S. economy growing by 1.8% this year, down 0.9 percentage point from its January forecast. The report also raised the U.S. inflation outlook to 3%, up 1 percentage point. The report's summary noted that the update, "reflects stubborn price dynamics in the services sector as well as a recent uptick in the growth of the price of core goods (excluding food and energy) and the supply shock from recent tariffs."
UBS Strategist Bhanu Baweja wrote in a note Tuesday that U.S. equities could see further declines under Trump's tariff policies, and noted that the levies do not "appear to be priced [in] presently," and that "valuations ... will adjust lower still as U.S. exceptionalism wanes."
"The first scenario takes the Trump administration at face value and assumes that the tariffs currently in place, 10% universal tariffs --- 145% tariffs on imports from China + selected sectoral tariffs, will all remain," Baweja wrote. "The second scenario sees the 10% universal tariffs staying but assumes a climbdown to 60% China tariffs."
Baweja added that the firm expects the market to reach its bottom around the beging of the third-quarter.
Looking Ahead:
Market participants will react to economic reports for April services and manufacturing sectors alongside a series of Fedspeak and the release of the central bank's Beige Book due out Wednesday afternoon. Major earnings reports that could affect trade on Wednesday include Tesla
