Dow Jones: Sharp Rally Today Reverses 600-Point Slide on Strong Bank Earnings

Dow Rebounds Sharply, But VIX and Tech Say It’s Not Time to Relax

The Dow erased a 600-point drop Tuesday and ended the session up nearly 1%, with financials and industrials leading the charge. But underneath the surface, caution still ruled. Tech stayed weak, the VIX closed above 21, and volume on the rebound was only modest — signaling tactical dip-buying, not broad-based conviction.

At 18:00 GMT, the Dow Jones Industrial Average is trading 46,461.72, up 394.14 or +0.86%.

What Triggered the Turnaround?

Stocks opened sharply lower after China imposed sanctions on five U.S. subsidiaries of South Korea’s Hanwha Ocean, reigniting fears of an economic cold war. Treasury Secretary Scott Bessent called the move a “sign of weakness” — but also a warning that Beijing might try to drag others down. That kind of mixed messaging reflects the market’s hesitation: are we dealing with economic posturing, or systemic risk?

Earnings helped change the tone. Wells Fargo surged 7% and Citigroup climbed 3.4% after solid results, giving investors a reason to step in. The rally wasn’t driven by confidence — it was about price. Strong financials provided a psychological floor, and short-covering or dip-buying algorithms likely helped the momentum.

Who Led the Bounce — and Who Stayed Behind?

Cyclicals were the winners. Caterpillar gained nearly 5%, American Express rose 3.6%, and Honeywell tacked on over 2%. These names suggest the economy still has some engine left, or at least that traders aren’t pricing in a downturn just yet.

But tech told a different story. Nvidia dropped more than 3%, Amazon lost over 1%, and Salesforce slipped 2%.

Higher Treasury yields are playing a role here — the 10-year held near 4.63%, and that’s pressuring growth names. When yields rise, future cash flows get discounted more sharply, which weighs on tech valuations. That’s the connection traders are watching.

Even within the banks, it wasn’t a clean sweep. JPMorgan and Goldman Sachs both beat estimates but slipped on the day — likely a mix of profit-taking and front-loaded expectations. It reinforces the idea that this rally still has skeptics.

What’s the VIX Saying About Market Sentiment?

The VIX spiked above 22 in the morning — a four-month high — before easing back under 21. That’s still elevated. Sub-20 is typically where traders feel more comfortable, and today’s close puts us in the zone where markets can rally, but corrections remain in play. Hedging demand hasn’t disappeared. This wasn’t a fear unwind — just a reset.

To flip the script, we’d need more than green numbers. Look for a VIX under 19, stronger breadth, and heavier volume on up days. Today’s rally came on middling turnover — not the kind of stampede that signals new conviction.

What Happens If Tech Doesn’t Stabilize?

That’s the key risk. Mega-cap tech still anchors the broader indexes. If Nvidia, Amazon, and peers continue to slip, the S&P 500 could drift back toward support  that held last week. The Dow would likely also retest its support near 45,000 — a level it held earlier today.

Until tech firms up or yields ease, expect chop. Buyers are still willing to step in on weakness, but there’s no evidence they’re chasing strength. The path of least resistance is sideways — with a tilt lower if earnings stumble or China tensions escalate.

More Information in our Economic Calendar.