New York City (Reuters) – U.S. stocks closed higher on Tuesday after an announced delay of planned tariffs on some Chinese imports brought purchasers back to the equities market in a broad-based rally.
Tech stocks, directed by Apple Inc (AAPL.O), led all three major U.S. indexes into the black following the announcement, which soothed worries over the U.S.-China trade war and growing signs of impending recession.
U.S. Trade Agent Robert Lighthizer said the United States would hold back on imposing additional 10% tariffs on crucial Chinese items, including laptops and cellphones, tariffs that were initially set to go into effect next month.
“It’s a stemming of the down momentum due to the fact that it does give some trade optimism,” stated Joseph Sroka, chief financial investment officer at NovaPoint in Atlanta. “We’re entering the tail end of revenues season, so geopolitical and macroeconomic news will control the marketplaces direction for the next couple of weeks.”
Apple, a most likely beneficiary of the tariff hold-up, increased 4.2% on Nasdaq, while the Philadelphia SE Semiconductor Index.SOX got 3.0%.
In financial news, U.S. consumer costs USCPFY=ECI accelerated in July, with core CPI, which strips out volatile food and energy costs, growing at 2.2% year-on-year, its largest gain in six months and well above the U.S. Federal Reserve’s 2% target.
The healthy inflation reading is not likely to change market expectations for another rates of interest cut from the Fed next month as it grapples with the U.S.-China trade war and its financial fallout.
“Trade issues could actually disrupt economic growth,” Sroka added. “And if the Fed cuts (interest) rates in September, it might be considered a safety web, to be proactive rather than waiting till it’s too late.”
The spread in between 2-year and 10-year U.S. Treasuries hit its flattest level in 12 years, reflecting stress and anxieties over trade and geopolitical chaos. Yields rose across the board on news of the tariff hold-up.
The Dow Jones Industrial Average.DJI increased 372.54 points, or 1.44%, to 26,279.91, the S&P 500. SPX acquired 42.48 points, or 1.47%, to 2,926.23 and the Nasdaq Composite.IXIC added 152.95 points, or 1.95%, to 8,016.36.
All of the 11 major sectors in the S&P 500 closed in the black, with technology.SPLRCT and consumer discretionary.SPLRCD seeing the most significant portion gains.
Toys and footwear were amongst the Chinese items momentarily spared from additional tariffs.
Nike Inc (NKE.N) rose 2.0%, while toymakers Hasbro Inc (HAS.O) and Mattel Inc (MAT.O) innovative 2.7% and 4.6%, respectively.
Facebook Inc (FB.O) pared gains following a Bloomberg report that the social media company had hired outside contractors to transcribe user audio clips, ending up 1.7%.
Shares of CBS Corp (CBS.N) and Viacom Inc (VIAB.O) gained 1.4% and 2.4%, respectively, after sources told Reuters the companies had reached an arrangement in principle concerning their upcoming merger.
The second-quarter incomes season has reached the last stretch, with 453 of the companies in the S&P 500 having actually published outcomes. Of those, 73.3% beat consensus estimates, according to Refinitiv information.
Experts see S&P 500 second-quarter incomes development of 2.9% year-on-year, a substantial improvement over the paltry 0.3% growth anticipated on July 1, per Refinitiv.
Advancing problems surpassed declining ones on the NYSE by a 2.46-to-1 ratio; on Nasdaq, a 2.30-to-1 ratio favored advancers.
The S&P 500 published 31 new 52-week highs and 18 new lows; the Nasdaq Composite recorded 60 brand-new highs and 128 brand-new lows.
Volume on U.S. exchanges was 7.95 billion shares, compared to the 7.34 billion-share average over the last 20 trading days.
Reporting by Stephen Culp; modifying by Jonathan Oatis
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