Wall Street rebounded on Tuesday in a broad-based rally as investors brushed aside intensifying trade rhetoric between the United States and China. All three major US indexes closed higher following Monday's sell-off. Late Monday, US President Donald Trump announced that 10 percent tariffs on $200 billion in imports from China would go into effect next week, escalating the tit-for-tat trade spat between the world's two largest economies.
China responded on Tuesday by unveiling 10 percent tariffs on about $60 billion of US goods effective September 24. "Initially they were talking about tariffs in the 20 to 25 percent range, and that's actually been lowered to 10 percent," said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco. "Maybe these numbers aren't going to be as bad as initially thought."
"There's much more pressure on the Chinese to reach a deal than there is on (the United States), at this point," Massocca added. Tech stocks were bolstered by news that Apple Inc and fitness gadget-maker Fitbit Inc would escape the tariffs. Apple shares closed up 0.2 percent while Fitbit shares rose 6.4 percent.
Trade-sensitive industrials gained ground, with Boeing Co ending 2.1 percent higher. The planemaker, the biggest US exporter to China, led the Dow Jones Industrial Average's advance. Nike Inc also boosted the blue-chip index as Telsey Advisory Group hiked its price target. The stock was reached an all-time closing high, up 2.4 percent.
The Dow Jones Industrial Average rose 184.84 points, or 0.71 percent, to 26,246.96, the S&P 500 gained 15.51 points, or 0.54 percent, to 2,904.31 and the Nasdaq Composite added 60.32 points, or 0.76 percent, to 7,956.11. Consumer discretionary was the best performing of the 11 major S&P 500 sectors, rising 1.3 percent.
The energy sector advanced 0.7 percent as crude prices rose on signs that Opec is not prepared to boost output to address shrinking supplies from Iran. Among losers, Tesla Inc sank 3.4 percent after disclosing that it had received a request for documents from the US Department of Justice regarding Chief Executive Elon Musk's public statements about taking the company private.
Insurer Marsh & McLennan slid by 4.0 percent on news that it will buy British insurance and reinsurance broker Jardine Lloyd Thompson for $5.7 billion. Defensive groups lagged, with consumer staples ending down 0.4 percent. General Mills Inc dropped 7.6 percent after missing analysts' quarterly sales estimates, extending the packaged food company stock's near-26 percent year-to-date decline.
Advancing issues outnumbered declining ones on the NYSE by a 1.35-to-1 ratio; on Nasdaq, a 1.42-to-1 ratio favoured advancers. The S&P 500 posted 39 new 52-week highs and three new lows; the Nasdaq Composite recorded 58 new highs and 83 new lows. Volume on US exchanges was 6.39 billion shares, compared with the 6.20 billion average for the full session over the last 20 trading days.
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