April 22 (Reuters) - U.S. stocks rebounded on Tuesday as a spate of quarterly earnings reports helped investors look past President Donald Trump's warnings of recession if the U.S. Federal Reserve does not cut interest rates, which sparked worries that the central bank could lose its essential autonomy.
A broad rally boosted all three major U.S. indices by more than 2%, on the heels of the prior session's steep selloff driven by Trump's ramped up rhetoric against Fed Chair Jerome Powell, who is widely considered a stabilizing force for the markets.
Having been battered for weeks by the White House's erratic and multi-front tariff disputes, the S&P 500 is currently 14.4% below its record closing high reached on February 19. Should the index dip 20% or more below that level, that would confirm it has entered a bear market.
Earlier this month, tech-heavy Nasdaq confirmed it entered a bear market after reaching its record closing high on December 16.
"The primary concern that is driving market volatility is about what the future will hold and the impact tariffs may have on future activity," said Bill Merz, head of Capital Market Research at U.S. Bank Wealth Management, Minneapolis. "Investors are looking for clues as to what tariff policy will be, and those policies remain in flux."
Those uncertainties helped prompt the International Monetary Fund to slash its forecasts for U.S. 2025 economic growth to 1.8%, citing the impact of U.S. tariffs, now at 100-year highs.
First-quarter earnings season gathered steam.
So far, 82 of the companies in the S&P 500 have reported. Of those, 73% have beaten expectations, according to LSEG.
Analysts now see aggregate S&P 500 earnings growth 8.1% for the Jan - March period, down from the 12.2% growth forecast at the beginning of the quarter, per LSEG.
"Current earnings are showing a continuation of good fundamentals, which is not a surprise," Merz said, adding that investors are parsing corporate guidance for "clarity on what companies are planning to do in response to tariff policy."
Shares of industrial conglomerate 3M Co (MMM.N), jumped 8.3% after the company posted better-than-expected first-quarter profit expectations, though it flagged a likely hit to 2025 profit from tariffs.
Northrop Grumman (NOC.N), slumped 14.2% after it reported a sharp drop in profit.
Aerospace and defense company RTX (RTX.N), tumbled 10.0% after flagging a potential $850 million hit to its annual profit due to tariffs.
The Dow Jones Industrial Average (.DJI), rose 822.00 points, or 2.15%, to 38,992.41, the S&P 500 (.SPX), gained 103.79 points, or 2.01%, to 5,261.99 and the Nasdaq Composite (.IXIC), gained 359.27 points, or 2.26%, to 16,230.17.
All 11 major sectors in the S&P 500 advanced, with consumer discretionary (.SPLRCD), and financials (.SPSY), benefiting from the largest percentage gains.
Advancing issues outnumbered decliners by a 5.8-to-1 ratio on the NYSE. There were 45 new highs and 33 new lows on the NYSE.
On the Nasdaq, 3,514 stocks rose and 815 fell as advancing issues outnumbered decliners by a 4.31-to-1 ratio.
The S&P 500 posted 4 new 52-week highs and one new low while the Nasdaq Composite recorded 28 new highs and 70 new lows.
Reporting by Stephen Culp; Additional reporting by Lisa Mattackal and Purvi Agarwal in Bengaluru; Editing by Aurora Ellis
