Wall Street is showing President Donald Trump that he doesn’t need a big victory in trade negotiations to win investors over — he just needs to create a path for cooler heads to prevail. Stocks rallied sharply on Tuesday, apparently boosted by news that Treasury Secretary Scott Bessent said he expects de-escalation in the tariff standoff with China “in the very near future.” The remarks came at a closed-door JPMorgan event in Washington, D.C., a person in the room told CNBC, and were first reported by Bloomberg News . Trump built his public persona in business and politics on the idea that he is a master negotiator. But now, facing the possibility of trade discussions with dozens of countries at once, Wall Street is hoping he finds a way to make quick agreements instead of playing hardball to win every single encounter. Bassam Nawfal, chief asset allocation strategist at Alpine Macro, deemed this approach the “art of the backpedal.” “While it is futile to predict every twist in this high-stakes drama, a clearer picture of the path ahead is forming: as recession risks rise … Trump may be looking to de-escalate and settle most trade disputes,” Nawfal said in a note to clients on Tuesday. Implicit in the market reaction to Bessent’s comments is an optimism that the administration won’t really push for the sweeping changes to the global economy proposed by Trump and tariff hardliners like White House adviser Peter Navarro. Traders are betting that Trump will settle for something smaller and less disruptive. “‘Investors are bearish but not short’ has been the narrative of the week with a broad acknowledgment that an extended period of uncertainty will all but assure economic contraction, but most are unwilling to press recessionary trades for fear that this ‘manufactured’ downturn can be miraculously avoided in the 11th hour at the whim of President Trump,” the Barclays sales and trading desk said in a note to institutional clients. To be sure, the exact details of any trade deal might have unforeseen impacts on the market or the economy, especially with apparently competing priorities among members of the president’s team. But even a messy trade deal could be easier for the market to stomach than the full April 2 plan. David Waddell, chief investment strategist at Waddell & Associates, said that every “stutter-step” negotiated toward trade deals and away from the harshest tariffs is a positive for the market — and the economy. “The reindustrialization story was bearish. The renegotiation story is somewhat bullish. It just needs the compliance of our trade partners,” Waddell told CNBC. Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles, and Dan Ives, with a special edition of Pro Talks with Tom Lee. You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!
