Stocks mount large recovery after U.S. delays some tariffs on Chinese goods.
The U.S. stock market rebounded sharply on Tuesday after the Trade Representative announced a delay in new tariffs on several Chinese goods. Some market observers say the delay could give the U.S. and China more time to negotiate a trade agreement.
All of Wall Street’s major indices reported firm gains Tuesday, with the Dow Jones Industrial Average (NYSEARCA:DIA) rising more than 500 points through the morning session. The blue-chip index settled up 367.87 points, or 1.4%, at 26,275.24.
The large-cap S&P 500 Index (NYSEARCA:SPY) rose 1.4% to close at 2,925.33. Ten of 11 primary sectors reported gains, with information technology leading the pack.
Surging technology stocks propelled the Nasdaq Composite Index (NYSEARCA:QQQ) sharply higher. The tech-driven average climbed 2% to 8,016.36.
A measure of implied volatility known as the CBOE VIX (NYSEARCA:VXX) fell below the historic average on Tuesday as calm returned to Wall Street. The VIX fell 13.9% to 18.15 on a scale of 1-100 where 20-25 represents the long-running mean.
Equities surged on Tuesday after the U.S. Trade Representative said there will be delays on several categories of Chinese imports until December 15. Duties on the remaining categories will still apply on September 1.
In economic data, core consumer prices rose faster than expected in July, possibly conflicting with the Federal Reserve’s recent decision to lower interest rates. The core consumer price index (CPI) rose 2.2% annually in July following a similar increase the month before, the Labor Department reported Tuesday.
The Final Word: Despite modest tariff relief, the United States and China are barreling toward a full-blown trade war. At this rate, a new trade agreement before the U.S. presidential election in 2020 is considered unlikely.