U.S. stocks surged more than 1.5% on Tuesday after the Trump administration said it would delay 10% tariffs on some Chinese products, including laptops and cell phones, driving a 4% rally in shares of iPhone maker Apple Inc.
In a statement, the administration also excluded video game consoles and certain items of footwear and clothing from the 10% rate, which had been scheduled to start next month, an abrupt pull-back from its hardline stance on trade.
That eased the fears of a recession driven by the protracted trade war that has dominated trading on Wall Street this year and spurred a bout of extreme volatility following President Donald Trump’s announcement of a new round of tariffs on Aug. 1.
“The escalation of the U.S. China trade war has been an overhang … and the fact that we have got a bit of a reprieve on that is putting a bit of optimism into markets,” said Art Hogan, chief market strategist at National Securities in New York.
“There was a risk that China would retaliate by not even showing up to the negotiating table, so now it feels like we got a step in the right direction towards negotiation and perhaps an end to the trade war.”
A 4.2% jump in shares of Apple, which makes iPhones and MacBooks in China, along with a rise in chip stocks pushed the technology sector 2.24% higher. The Philadelphia chip index .SOX rose 3.16%.
READ ALSO: Apple suspends Siri response grading program amid privacy concerns
Reuters reports that, Industrial bellwethers 3M Co and Caterpillar Inc, traditionally among the most sensitive to trade concerns and China, jumped about 3% each, while the S&P 500 retailing index .SPXRT also jumped 2.12%.
Wall Street’s main indexes had initially opened lower, adding to a global slide in stocks due to geopolitical concerns, with a Labor Department report also showing the core consumer price index rose 2.2% in the 12 months through July.
For some analysts, that data spoke against the U.S. Federal Reserve delivering aggressive further cuts in interest rates, expectations of which have been an important pillar propping up sentiment since June.
Financial markets have fully priced in a single quarter-point move at the U.S. central bank’s September meeting and are still giving good odds on two more moves after that this year.
At 10:58 a.m. ET, the Dow Jones Industrial Average was up 411.66 points, or 1.59%, at 26,309.37, the S&P 500 was up 44.26 points, or 1.54%, at 2,927.35. The Nasdaq Composite was up 152.56 points, or 1.94%, at 8,015.97.
Only the defensive real estate .SPLRCR and utilities .SPLRCU sectors posted small losses.
Advancing issues outnumbered decliners by a 3.02-to-1 ratio on the NYSE and by a 2.75-to-1 ratio on the Nasdaq.
The S&P index recorded 21 new 52-week highs and 18 new lows, while the Nasdaq recorded 47 new highs and 86 new lows.
Yetunde Adegoke
