U.S. stocks ended the day higher Wednesday — but saw earlier gains evaporate as investors measured White House officials’ softening tariff and trade stance against hard-line postures from other countries.
The S&P 500 finished up 1.7% after having earlier climbed as high as 3.2%. The tech-focused Nasdaq closed up 2.5% after surging 4.1%. The Dow Jones Industrial Average gained about 400 points, or 1.1%, after adding as many as 1,000 points or nearly 3% earlier.
Since President Donald Trump’s election in November, the S&P 500 is now down 7%, and about 13% lower from the highs seen in February.
Stocks had opened higher Wednesday after Trump said he would likely dial back the harsh tariffs he had set for Chinese products. Markets were also encouraged after he said he would not make an immediate change in leadership at the Federal Reserve.
A key change in the White House’s stance on tariffs came amid warnings from companies this week about potential product shortages and empty shelves, according to a person familiar with the White House’s thinking.
The tariffs have made it prohibitively expensive to bring products into the country. As a result, many firms have simply halted imports, the person said.
The White House is particularly concerned about shortages of products around the holidays, the person said. The Christmas ordering cycle is starting and July Fourth is coming up, and retailers might not have the summer products like beach chairs, umbrellas, grills, fireworks or light-up trinkets.
After the closing bell, Chipotle reported same-store sales had declined year-on-year for the first time since the pandemic as it warned about a spending “slowdown” among its customers.
Still, White House officials cautioned that the tariffs would remain in place for the time being. Treasury Secretary Scott Bessent clarified later Wednesday morning that while he viewed the current tariffs stand-off as “unsustainable,” any de-escalation would have to be mutual.
“I think that point there would have to be a de-escalation by both sides,” Bessent said.
Asked if there was any incoming unilateral offer from Trump to China on tariffs, Bessent replied, “Not at all.”
He added that he would be “surprised” if there was a discussion about tariffs coming down by as much as 50%, as a report Wednesday in The Wall Street Journal indicated.
On Tuesday, Trump said that U.S. tariffs on China would “come down substantially but it won’t be zero.”
A representative for the Chinese embassy in the U.S. continued to condemn the Trump administration’s approach.
“Our doors are open if the U.S. wants to talk,” the spokesperson said in a statement Wednesday. “If a negotiated solution is what the U.S. truly wants, it should stop threatening and blackmailing China and seek dialogue based on equality, respect and mutual benefit. To keep asking for a deal while exerting extreme pressure is not the right way to deal with China and simply will not work.”
Markets had been further cheered after Trump said Tuesday he had “no intention” of firing Federal Reserve Chair Jerome Powell, despite calling him a “major loser” and “Mr. Too Late” the day before — a reference to what Trump perceives as dawdling in lowering interest rates.
