Closing Recap 

U.S. stocks posted strong back-to-back gains as President Trump softened his rhetoric on the Fed and China trade talks, though indices finished well off session highs; gold plunged sharply from records, oil reversed lower, the dollar strengthened, and Treasury yields ended flat after volatility. 

Key Takeaways 

• Second Day of Strong Gains: Major indices rallied significantly again, building on Tuesday’s turnaround. 
• Gains Pared from Highs: Similar to Tuesday, stocks pulled back significantly from intraday peaks as officials reiterated the difficulty of negotiations despite the softer tone. 
• Potential Tariff Cuts Reported: WSJ reported the administration is considering slashing China tariffs, potentially by more than half, further fueling optimism. 
• Gold Plummets: Gold suffered a massive sell-off, dropping over 3.5% as safe-haven demand evaporated on trade hopes and risk appetite returned. 
• Oil Reverses Lower: Crude oil gave up overnight gains to finish sharply lower on news regarding potential OPEC+ output increases and Kazakhstan prioritizing national interests. 
• Dollar Rebounds, Yields Flat: The U.S. dollar recovered further, while Treasury yields ended near unchanged after erasing early declines following a 5-year note auction. 
• Economic Data Mixed: Flash PMIs weakened, but new home sales surged; Fed’s Beige Book highlighted pervasive trade uncertainty. 

Market Overview 

U.S. equity markets delivered another day of robust gains, extending the recovery that began Tuesday. The positive momentum was primarily driven by a noticeable shift in tone from President Trump regarding two major market overhangs: the Federal Reserve and U.S.-China trade relations. Overnight, comments from Trump indicating he had no intention of firing Fed Chair Powell (despite wanting lower rates) and, crucially, suggesting that the punishing 145% tariffs on China could come down “substantially” if a deal is reached, provided significant fuel for the rally. This optimism was further amplified by reports (WSJ) that the administration is actively considering deep cuts to the China tariffs, potentially more than halving them or adopting a tiered approach. Treasury Secretary Bessent’s comments yesterday about the unsustainability of the current situation also lingered positively. 

Index	Up/Down	% Change	Last
DJ Industrials	419.59	0.0107	39606
S&P 500	88.06	0.0167	5375
Nasdaq	407.63	0.025	16708
Russell 2000	28.85	0.0153	1919

However, the rally wasn’t a straight line up. Stocks experienced a familiar mid-day pullback from session highs. This occurred after Treasury Secretary Bessent reiterated that while de-escalation is expected, the tariffs would need to come down before talks proceed, and President Trump wouldn’t make that move unilaterally – underscoring that significant hurdles remain. Economic data released today was mixed and largely secondary to the trade narrative. While flash PMIs indicated a slowdown in April, March new home sales significantly beat expectations. The Fed’s Beige Book survey confirmed that uncertainty around trade policy was widespread and weighing on business outlooks across the country. Despite the fade, the market held onto substantial gains, reflecting relief at the apparent reduction in immediate trade war escalation risk.

Economic Data

Economic data presented a mixed picture today, with slowing PMI readings and cautious Beige Book commentary contrasting sharply with strong housing sales data. 

• S&P Global Flash PMIs (Apr): Indicated a slowdown from March. Composite PMI fell to 51.2 (from 53.5), Services PMI dropped to 51.4 (from 54.4), while Manufacturing PMI edged up slightly to 50.7 (from 50.2).
• New Home Sales (Mar): Surged +7.4% month-over-month to a 0.724 million annualized rate, significantly beating the 0.680M consensus. Supply tightened to 8.3 months. The median sale price ($403,600) was down 7.5% year-over-year. 
• Fed Beige Book: Reported little change in overall economic activity but highlighted pervasive uncertainty and worsened outlooks in several districts due to international trade policy concerns. Price growth was characterized as modest to moderate. 

Commodities, Currencies, and Treasuries

Gold prices experienced a dramatic reversal, plummeting $120.90 (-3.53%) to settle at $3,294.10/oz, giving back a significant portion of recent gains. The sell-off was driven by a sharp decrease in safe-haven demand as investors rotated back into risk assets fueled by hopes of trade de-escalation. Bitcoin continued its recent momentum, rising over 3%. Crude oil prices also reversed course, erasing overnight gains to finish lower, with WTI down $1.40 (-2.2%) at $62.27/bbl. News that Kazakhstan might prioritize national interests over OPEC+ cuts and suggestions the group might accelerate output increases weighed on prices, overshadowing earlier inventory draw reports. The U.S. dollar index strengthened notably, rising around 1% as the Euro and Yen weakened against it, reflecting the shifting risk sentiment and perhaps unwinding of recent extreme dollar pessimism. Treasury yields were volatile, falling early before erasing losses to finish near the day’s highs and largely unchanged from the prior close. The 10-year yield ended around 4.385% after a relatively weak 5-year note auction midday.

Asset	Up/Down	Unit / % Change	Last
WTI Crude	-1.4	USD/bbl	62.27
Brent	-1.32	USD/bbl	66.12
Gold	-120.9	USD/oz	3294.1
EUR/USD	-0.0091	USD	1.1328
USD/JPY	1.74	JPY	143.32
10-Year Note	-0.003	%	0.04385

Looking Ahead 

The market’s rally hinges on continued positive rhetoric and eventual concrete action on trade de-escalation, particularly with China. While the tone has softened, significant uncertainty remains, and any renewed threats could quickly reverse sentiment. Investors will look for confirmation of potential tariff reductions reported by the WSJ. Q1 earnings season continues, offering insights into corporate resilience. Key economic data, especially inflation and growth figures, will also be closely watched for their potential influence on Fed policy expectations, even as the Fed maintains a cautious stance.