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Once again, Wall Street's reluctance to escalate the trade dispute between the United States and China proved to be short-lived.
US stocks closed higher on Tuesday as investors largely dismissed the Trump administration's decision to impose tariffs on an additional $ 200 billion worth of Chinese products. A quick response from China, saying it will raise tariffs on US $ 60 billion worth of goods, has also not dampened the buying spirit of investors.
"Fees, in a way, have arrived as planned, but there has been this ongoing hope that this will eventually be resolved," said Erik Davidson, investment director of Wells Fargo Private Bank.
Earnings from tech stocks and consumer-driven companies fueled Tuesday's big rally, which canceled almost all index losses a day earlier.
Bond yields climbed, sending banks higher. Energy values also rose in line with crude oil prices.
The S & P 500 index rose 15.51 points, or 0.5%, to 2,904.31. The Dow Jones Industrial Average advanced 184.84 points, or 0.7%, to 26,246.96. The Nasdaq composite gained 60.32 points, or 0.8%, at 7.956.11. The Russell 2000 Small Business Index added 7.42 points, or 0.4%, to 1,710.97.
The Trump administration announced on Monday that it would impose tariffs on an additional $ 200 billion of Chinese products as of next Monday, which could increase prices for products ranging from handbags to bicycle tires. Rates will start at 10% and then 25% on January 1st.
China responded by saying that it would increase customs duties on US goods worth $ 60 billion. The measure involves increases of 10% and 5% over 5,207 types of US goods. A list published last month included coffee, honey and industrial chemicals.
Trump has threatened to add an additional $ 267 billion of Chinese imports to the list of targets in response to retaliation by China. That would bring the total to $ 517 billion, covering almost everything China sells in the United States.
Despite this, there was no sign of nervousness on Tuesday that caused Monday's selloff, ending a five-game winning streak for the S & P 500.
"Some companies will be affected, but it was expected to be much worse," said Doug Cote, chief market strategist at Voya Investment Management.
Technology stocks accounted for a large portion of market gains. Chipmaker Micron Technology grew 4% to $ 45.33.
Apple, which was exempted from the new tariffs on products imported from China, added 0.2% to 218.24 dollars. Fitbit also benefited from certain components that the company uses to manufacture its fitness monitoring tapes that are not part of the items subject to the new tariffs. The stock jumped 6.4% to $ 5.80.
The gains made by consumer-oriented businesses have also helped lift the market. Netflix rose 4.9% to $ 367.65.
Investors also watched the latest batch of corporate earnings reports.
General Mills grain producer and package delivery giant FedEx fell sharply after posting quarterly results lower than Wall Street forecasts. General Mills fell 7.6% to $ 44.13, while FedEx lost 5.5% to $ 241.58.
Tesla slid 3.4% to $ 284.96 after Bloomberg announced that the Justice Department was investigating the electric car maker about public statements made by CEO Elon Musk. Earlier last month, Musk tweeted that he had secured funds to take the company privately. A few weeks later, he issued a statement in which he declared that the privatization agreement was down.
Oil prices climbed before the next OPEC meeting, during which members will assess how to deal with the supply loss of Iran, which faces US sanctions. US crude increased 1.4% to $ 69.85 a barrel in New York. Brent crude, used to fix international oil prices, rose 1.3% to $ 79.03 per barrel in London.
The recovery in oil prices has helped to increase energy stocks. Marathon Oil climbed 3% to $ 21.50.
Bond prices have fallen. The 10-year Treasury bond yield rose from 3.0% to 3% on Monday night. This is the highest level since May 22, when the yield reached 3.06%.
The dollar rose from 111.18 yen to 112.35 yen on Monday. The euro fell to 1.1667 dollars against 1.1686 dollars.
Gold slid 0.2% to $ 1,202.90 an ounce. Silver lost 0.3% to $ 14.19 an ounce. Copper jumped 3% to $ 2.73 a pound.
In the other energy sectors, fuel oil rose 1.3% to $ 2.24 per gallon, 1.4% to $ 2 a gallon of wholesale gasoline, and 4.2% to natural gas. at $ 2.93 per 1,000 cubic feet.
The main stock indexes in Europe closed mostly on Tuesday. The DAX in Germany rose by 0.5%, while the French CAC 40 gained 0.3%. The British FTSE 100 was flat.
The Japanese Nikkei 225 jumped 1.4%, while the Kospi in South Korea added 0.3%. The Hang Seng Hong Kong index gained 0.6%.
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