NEW YORK: U.S. stocks closed higher on Tuesday after an announced delay of planned tariffs on some Chinese imports brought buyers back to the equities market in a broad-based rally.
Tech stocks, headed up by Apple Inc , led all three major U.S. indexes into the black following the announcement, which calmed fears over the U.S.-China trade war and growing signs of imminent recession.
U.S. Trade Representative Robert Lighthizer said the United States would hold off on imposing additional 10per cent tariffs on key Chinese goods, including laptops and cellphones, tariffs that were originally set to go into effect next month.
"It's a stemming of the downward momentum because it does give some trade optimism," said Joseph Sroka, chief investment officer at NovaPoint in Atlanta. "We're getting into the tail end of earnings season, so geopolitical and macroeconomic news will dominate the markets direction for the next few weeks."
Apple, a likely beneficiary of the tariff delay, rose 4.2per cent on Nasdaq, while the Philadelphia SE Semiconductor Index gained 3.0per cent.
In economic news, U.S. consumer prices accelerated in July, with core CPI, which strips out volatile food and energy prices, growing at 2.2per cent year-on-year, its largest gain in six months and well above the U.S. Federal Reserve's 2per cent target.
The healthy inflation reading is unlikely to change market expectations for another interest rate cut from the Fed next month as it grapples with the U.S.-China trade war and its economic fallout.
"Trade issues could really disrupt economic growth," Sroka added. "And if the Fed cuts (interest) rates in September, it could be considered a safety net, to be proactive rather than waiting until it's too late."
The spread between 2-year and 10-year U.S. Treasuries hit its flattest level in 12 years, reflecting anxieties over trade and geopolitical turmoil. But yields rose across the board on news of the tariff delay.
The Dow Jones Industrial Average rose 372.54 points, or 1.44per cent, to 26,279.91, the S&P 500 gained 42.48 points, or 1.47per cent, to 2,926.23 and the Nasdaq Composite added 152.95 points, or 1.95per cent, to 8,016.36.
All of the 11 major sectors in the S&P 500 closed in the black, with technology and consumer discretionary seeing the biggest percentage gains.
Toys and footwear were among the Chinese goods temporarily spared from additional tariffs.
Nike Inc rose 2.0per cent, while toymakers Hasbro Inc and Mattel Inc advanced 2.7per cent and 4.6per cent, respectively.
Facebook Inc pared gains following a Bloomberg report that the social media company had hired outside contractors to transcribe user audio clips, ending up 1.7per cent.
Shares of CBS Corp and Viacom Inc gained 1.4per cent and 2.4per cent, respectively, after sources told Reuters the companies had reached an agreement in principle regarding their impending merger.
The second-quarter earnings season has reached the final stretch, with 453 of the companies in the S&P 500 having posted results. Of those, 73.3per cent beat consensus estimates, according to Refinitiv data.
Analysts see S&P 500 second-quarter earnings growth of 2.9per cent year-on-year, a significant improvement over the paltry 0.3per cent growth expected on July 1, per Refinitiv.
Advancing issues outnumbered declining ones on the NYSE by a 2.46-to-1 ratio; on Nasdaq, a 2.30-to-1 ratio favored advancers.
The S&P 500 posted 31 new 52-week highs and 18 new lows; the Nasdaq Composite recorded 60 new highs and 128 new lows.
Volume on U.S. exchanges was 7.95 billion shares, compared with the 7.34 billion-share average over the last 20 trading days.
(Reporting by Stephen Culp; editing by Jonathan Oatis)