NEW YORK – Stocks rose sharply on Wall Street Tuesday after the U.S. government said it would delay new tariffs on certain goods imported from China and remove tariffs on other goods entirely.
The news marked a welcome cool-off of trade tensions between the two economic giants which has been roiling global markets for weeks. President Donald Trump's announcement of the wide-ranging new tariffs on August 1 rattled investors, as did a subsequent decision by Beijing to allow its currency to weaken against the dollar.
The U.S. Trade Representative said the new tariffs of 10%, due to kick in on September 1st, would be delayed until mid-December on cell phones and other electronics products as well as some kinds of toys, shoes and clothing. Apple, Mattel and Nike surged as a result.
The latest developments in the ongoing trade feud snapped stocks out of a two-day dip. Markets have been particularly volatile in August as China and the U.S. again escalated the long-running trade war and cast a cloud over prospects for global economic growth.
Apple surged 5.1% in the early going and did much of the work to lift what has been a volatile technology sector. The sector is highly sensitive to trade tensions because those companies do so much business with China. Chipmakers including Intel and Nvidia also made solid gains.
Amazon rose 2% and Nike gained 1.7% to help lift consumer-oriented stocks. The latest trade war developments also sent toymakers higher. Mattel rose 9.8% and Hasbro rose 6.4%.
Bond yields also headed higher. The yield on the 10-year Treasury note rose to 1.69% from 1.64% late Monday. That helped boost banks, which rely on higher bond yields to charge more interest on loans.
KEEPING SCORE: The S&P 500 index rose 1.8% as of 10:21 a.m. Eastern time. The Dow Jones Industrial Average rose 493 points, or 1.9%, to 26,391. The Nasdaq composite rose 2.3%.
OVERSEAS: European markets also rose sharply as investors moved money back into stocks. The Euro Stoxx average, which was slightly lower before the announcement from the U.S. Trade Representative, was up 1.2%.
Stocks fell broadly in Asia, with the Hang Seng shedding 2.1% as pro-democracy protests crippled Hong Kong's airport for a second day. The Chinese government cast an ominous shadow over the growing protests by calling them "sprouts of terrorism" and raised concerns over how it may respond.
MISSING PARTS: Advance Auto Parts fell 2% after the auto parts retailer trimmed its 2019 revenue forecast following a weak second quarter. The company reported only a slight increase in overall sales and sales at established stores remained flat. Profit and revenue for the second quarter fell short of Wall Street forecasts.