Stocks rebound as Treasury chief Bessent says tariff negotiations could bring “good deals”

Stocks are on the rise today after a three-day sell-off that caused trillions in market value to be wiped out due to concerns about President Trump’s reciprocal tariffs. The S&P 500 index saw a significant surge of 141 points, or 2.8%, reaching 5,203.65 in early morning trading. The Dow Jones Industrial Average also jumped by 2.9%, while the Nasdaq composite index climbed by 3.1%.

The sell-off initially began on April 3, following the announcement of tariffs on imports from various nations by President Trump. These tariffs, in addition to previously announced import duties on industries such as auto, steel, and aluminum, have raised concerns among Wall Street economists. They predict that the tariffs could lead to increased inflation, as the costs are likely to be passed on to consumers in the form of higher prices. This, in turn, could potentially hinder U.S. economic growth and elevate the risk of a recession.

Despite these worries, there is some optimism among investors that the tariffs may be reduced. Treasury Secretary Scott Bessent mentioned on CNBC that the Trump administration is in negotiations with several countries regarding tariffs. He expressed hope for favorable deals and emphasized the administration’s strong negotiating leverage at present.

Today’s rebound in the stock market may also be attributed to investors seizing the opportunity to purchase stocks at lower prices after the recent downturn. However, analysts caution that the tariffs still pose a threat to long-term business growth in the U.S. The ongoing trade tensions and disruptions in global trade are expected to have a negative impact on economic growth and push inflation levels higher.

As corporate earnings season kicks off this week, with Delta Air Lines reporting on Wednesday and major U.S. banks releasing their latest results on Friday, all eyes will be on their forecasts amidst the escalating trade tensions sparked by Trump’s tariffs. The airline sector, previously anticipating a strong 2025, has been particularly affected by the tariff announcements.

Furthermore, with the government set to release its latest inflation data on Thursday, the Federal Reserve’s upcoming interest rate decision may be influenced. Many economists have heightened concerns about a potential U.S. recession due to the tariffs, suggesting that the Fed may need to intervene by cutting rates to stimulate economic growth.

In conclusion, while the stock market shows signs of recovery today, the impact of President Trump’s tariffs continues to cast a shadow over the economy. Investors are advised to remain cautious amidst the ongoing trade negotiations and uncertainties surrounding future economic growth.

This article was originally published by The Associated Press and has been rewritten for WordPress by Aimee Picchi, the associate managing editor for CBS MoneyWatch, specializing in business and personal finance coverage.