Stock Market Today: Stocks Soar on China Trade Talk Hopes
Treasury Secretary Bessent said current U.S.-China trade relations are unsustainable and signaled hopes for negotiations.
Stocks saw big price moves again on Tuesday, only this time, the action was to the upside. Sentiment was boosted from the latest round of corporate earnings and encouraging trade headlines.
Blue chip stocks were in focus today, with 3M (MMM) and GE Aerospace (GE) among those reporting.
MMM shares jumped 8.1% – making it the best Dow Jones stock Tuesday – after the company reported higher-than-expected first-quarter earnings and revenue.
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More importantly, the industrial conglomerate reiterated its full-year guidance for earnings per share of $7.60 to $7.90. However, it cautioned against "tariff sensitivity" that could lower the final figure by 20 cents to 40 cents a share.
"Tariffs are going to be a headwind this year, but we thought it would be prudent to hold the impact outside of our full-year guidance, while I digest the new policies and fully develop and quantify mitigation plans," said 3M CEO William Brown in the company's conference call.
GE has a plan for tariffs
GE stock gained 6.1% after the maker of commercial and defense aircraft engines reported a first-quarter beat.
GE Aerospace also maintained its 2025 outlook, saying the company's cost-cutting measures and strong commercial services backlog will help offset the $1 billion hit it expects to take from President Donald Trump's tariffs.
And GE Chief Financial Officer Rahul Guy noted in the company's earnings call that the potential impact of tariffs is included in its guidance.
RTX braces for an $850 million tariff impact
Elsewhere in the defense space, RTX (RTX) plunged 9.8% after the company said it expects its bottom line to take an $850 million hit from tariffs this year – a figure that doesn't include the administration's reciprocal tariffs that are currently paused.
"Generally speaking, the aerospace and defense sector has operated in a duty-free environment, and that has been instrumental to the industry maintaining one of the largest trade surpluses across American manufacturing industries for decades," said RTX CEO Chris Calio in the company's earnings call.
And because RTX's supply chain is global, Calio said the company will be impacted if Trump's current trade policies stay in place "because not all regulatory and operational mitigations would address our tariff exposure."
Still, CFRA Research analyst Matthew Miller reiterated a Buy rating on the industrial stock.
The analyst believes RTX's solid first-quarter results, which came in higher than expected, robust backlog and "ongoing recovering in commercial aerospace and sustained defense demand" position it well for continued growth this year.
Bessent expects U.S.-China trade tensions to ease
On the trade front, Bloomberg reported that Treasury Secretary Scott Bessent expects to de-escalate trade tensions with China.
Bessent was said to have told attendees at an investor summit that although negotiations with Beijing have not yet begun, a trade deal is still a possibility.
"No one thinks the current status quo is sustainable," he noted, and expressed his belief that discussions between the two countries would provide "a sigh of relief for markets."
That was certainly the case today. At the close, the Dow Jones Industrial Average finished up 2.7% at 39,186, the S&P 500 gained 2.5% to 5,287, and the Nasdaq Composite added 2.7% to 16,300.
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