(Reuters) – 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.
The administration also excluded video game consoles and certain items of footwear and clothing from the 10% tariff, scheduled to start next month, an abrupt pullback from its hardline stance on trade.
It eased the fears of a recession triggered by the protracted trade war that dominated Wall Street this year and spurred a bout of volatility after President Donald Trump announced a new round of tariffs in August.
“The delay in the next round of tariffs is a positive for the tech sector and it is addressing any potential impact on the consumer as we head into year-end whether it’s back to school or holiday shopping,” said Mike Loewengart, vice-president of investment strategy at E*Trade Financial in New York.
“It’s tough to say what the timeline of a trade deal is. All indications are that China is gearing up for a protracted dispute while expectations in the U.S. are for a much quicker resolution.”
A 4.1% jump in shares of Apple (AAPL.O), which makes iPhones and MacBooks in China, along with a rise in chip stocks pushed the technology sector 2.38% higher. The Philadelphia chip index .SOX rose 3.04%.
Industrial bellwethers 3M Co (MMM.N) and Caterpillar Inc (CAT.N), traditionally among the most sensitive to trade concerns and China, jumped about 3% each, while the S&P 500 retailing index .SPXRT gained 2%.
Wall Street’s main indexes opened lower, adding to a global slide in stocks due to geopolitical concerns, with a U.S. Labor Department report showing that the core consumer price index rose 2.2% in the 12 months through July.
For some analysts, the data spoke against the U.S. Federal Reserve delivering aggressive 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 cuts this year. [MMT/]
At 12:14 p.m. ET, the Dow Jones Industrial Average .DJI was up 417.74 points, or 1.61%, at 26,315.45, and the S&P 500 .SPX was up 48.44 points, or 1.68%, at 2,931.53. The Nasdaq Composite .IXIC was up 157.63 points, or 2.00%, at 8,021.04.
The trade-fueled optimism also lifted U.S. Treasury yields, and helped the interest-rate sensitive banking index .SPXBK rise 1.78% and the broader financial sector .SPSY gain 1.72%.
Advancing issues outnumbered decliners by a 2.93-to-1 ratio on the NYSE and by a 2.43-to-1 ratio on the Nasdaq.
The S&P index recorded 23 new 52-week highs and 18 new lows, while the Nasdaq recorded 50 new highs and 100 new lows.
Reporting by Amy Caren Daniel and Arjun Panchadar in Bengaluru; Editing by Patrick Graham and Sriraj Kalluvila