Dow gains 300 points as trade tensions decline and technology stocks rebound

The stocks rose Tuesday as fears of global trade seemed to dwindle, following comments from the Chinese Ministry of Commerce and a top Mexican official. The sentiment was also boosted by a rebound in technology stocks.

The Dow Jones Industrial Average climbed 300 points, led by Goldman Sachs, Nike and Dow. The S & P 500 index has traded 1%, with the financials and technology sectors gaining more than 1% each. The Nasdaq Composite jumped 1.1%.

Tuesday's moves took place after major clues had taken a hit in the previous session, while the concern aroused by the tougher regulation of large technology companies. The Nasdaq fell into correction territory under the pressure of Alphabet, Amazon, Facebook and Apple. Amazon, Alphabet and Apple rebounded on Tuesday. Facebook shares have slipped, however.

The Chinese Ministry of Commerce said in a message that "differences and friction between the two sides" should be resolved through interviews, according to a Google translation. But the post also said the talks "must be based on mutual respect, equality and mutual benefit".

Wall Street took the comments as a sign, perhaps the country was releasing on its last month's harsh rhetoric. The United States and China raised tariffs on billions of dollars worth of reciprocal goods in May, raising concern over a long trade war.

The Trump administration has also threatened to freeze tariffs on all imports from Mexico, which would only add to these concerns. These worries were eased after Mexican Foreign Minister Marcelo Ebrard said on Tuesday that he expected the two countries to find a common ground on the subject. immigration and trade.

Republican lawmakers are also discussing whether they should vote to end the new tariffs on Mexican products threatened by Trump, according to the Washington Post, citing people close to the issue. The report states that GOP lawmakers worry about the consequences for businesses and consumers of tariffs.

Shares of GM and Ford, companies that could be affected by the new rates, rose by 4.3% and 3.2% respectively.

The yield on 10-year Treasury bills rose after reaching its lowest level in 20 months on Monday. Yields fell sharply last month as investors feared that tougher commercial conditions will dampen economic growth. The 10-year note was trading at 2.13%.

Banks' shares generally rose as yields rose. Citigroup, Morgan Stanley and Bank of America all traded at least 2% more. Goldman Sachs and JP Morgan Chase rose 2.5% and 1.7% respectively.

Investors also focused on monetary policy this week, with a host of Federal Reserve officials speaking on Tuesday.

Fed Chairman Jerome Powell said the central bank would "act appropriately to support the expansion," he added. However, the Fed does not know "how and when" global trade problems will be solved. "We are closely watching the implications of these developments for the US economic outlook."

These comments come amidst growing expectations of Fed rate cuts. The CME tool FedWatch indicated a 90% probability of a rate cut in September. Expectations of a second rate cut in December were also above 80%.

"We are seeing the impact of Trump's trade war and more generally a shortening of the Fed's" insurance reduction "schedule, wrote Steven Blitz, chief economist at TS Lombard, in a note. "Even if Trump ends it more quickly than expected, the late impact of monetary compression (as indicated by the end-of-last year curve) coupled with an incentive fiscal loosening suggests that a reduction is justified earlier. "

Governor Lael Brainard and Dallas Fed President Robert Kaplan are scheduled to speak later on Tuesday.

-Sam Meredith from CNBC contributed to this report.