Happy hump day, investors. Markets turned supersonic Tuesday on some choice comments from Treasury Secretary Bessent. Yet some investors are already warning of a head fake. First time reading? Join 190,000 self-directed investors and sign up here.

Strategists expect the rally to falter  

Investors are clamoring for good news from the White House. 

After weeks of mixed messaging on tariffs and historic market volatility, US stocks staged a sharp rebound Tuesday after Treasury Secretary Scott Bessent told investors behind closed doors that the US-China trade war could soon see a “de-escalation,” according to a Bloomberg report.

Regarding the current US-China tariffs, Bessent said at a private conference hosted by JPMorgan that “no one thinks the current status quo is sustainable.”

Even though no policies actually changed, markets took it as good news. Each of the three major benchmarks climbed more than 2.5%.

“It’s hard to tell whether anything is actually happening in negotiations with China,” Stephen Dover, chief markets strategist at Franklin Templeton, told Opening Bell Daily.

“But what is real is the recognition that the US must come to terms with China. I think that’s what the market read as positive.”

Few investors believe Tuesday’s rally was built on conviction. Rather, it marked the latest reflexive reaction for a market starved for relief.

“The market is dying for any breadcrumb of positivity,” Tom Essaye, the founder of Sevens Report Research, told Opening Bell Daily. “The market is flailing around.”

Meanwhile, the Tuesday rally followed Monday’s sell-off, and the S&P 500 remains more than 6% lower in April — historically the second-strongest month of the year.

David Wagner, head of equities at Aptus Capital Advisors, warned that head-fakes will continue until policy becomes more substantive. 

“It feels like the market has been attempting to price in a changing environment on a daily basis and Tuesday was no different,” he told me.

Broadly, investors and research firms expect volatility to persist in the coming weeks unless the White House solidifies its messaging. Dan Bustamante, chief investment officer at the long-short equity fund Bustamante & Co., added that investors will continue to grasp for any sign of updates on tariffs. 

“We’ve yet to solve the issue with tariffs, the dollar, and other policy changes and the market remembers that,” Bustamante said. “Plus we still have lower than average trading volumes. So while I think we can stage a rally I think it’s short-lived.”

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Elsewhere:

🚘️ Tesla missed on earnings expectations. Elon Musk’s automaker missed on the top and bottom lines for the first quarter, and automotive revenue plunged 20% from a year ago. Total revenue dipped 9% from $21.3 billion year-over-year, while net income dropped 71% to $409 million. (CNBC)

🏦 Trump doesn’t plan to fire Jerome Powell. In addition to clarifying that he won’t sack the Fed chief, the president also said Tuesday that China tariffs will “come down substantially.” Stock futures and the US dollar rallied following his remarks. (WSJ)

🎯 This is big: For the smartest takes on the biggest businesses in the world's biggest economy, you need Cheddar’s Big Business This Week. Subscribe free.

Rapid-fire:

• Tesla short sellers have made $11.5 billion in 2025 so far (S3 Partners)

• Lockheed Martin crushed first-quarter earnings expectations and the stock jumped (Barron’s)

• The IMF lowered its global growth forecast from 3.3% to 2.8% for 2026 (IMF Blog)

• Foreign investors are taking a double-hit on a weakening US dollar and falling US stocks (Opening Bell Daily)

• 20% of major US housing markets have seen year-over-year home price declines, though that share is gradually rising (ResiClub)

• Humanoid robots could create trillions in value across multiple AI-focused businesses (Pomp Letter)

• Elon Musk said he will spend much less time on DOGE next month (CNBC)

Last thing:

About me:

📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day, unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else. Feedback? Reply to this email, ping me on X @philrosenn, or write me directly at [email protected].