US stocks rally after Trump delays key China tariffs

The “Wall St” street sign is seen near US flags in front of the New York Stock Exchange (NYSE) on a rainy day on Wall Street in New York City on May 23, 2019. (Photo by Johannes EISELE / AFP)

NEW YORK, NY (AFP) — Wall Street stocks rallied Tuesday after President Donald Trump delayed tariffs on key Chinese goods, a shift from recent escalations in the long-running dispute between Washington and Beijing.

The Dow Jones Industrial Average finished up 1.4 percent at 26,279.91, below its session high but recovering most of the losses after Monday’s rout.

The broad-based S&P 500 rose 1.5 percent to finish at 2,926.32, while the tech-rich Nasdaq Composite Index jumped 2.0 percent to 8,016.36.

Stocks surged after Washington pushed back imposition of the 10 percent tariffs until December 15 for Chinese-made electronics, including items popular with holiday shoppers like cell phones, laptops and video game systems.

And news that top US and Chinese trade officials spoke by telephone early Tuesday offered further signs of a possible letup in the trade war that had been escalating in recent weeks.

The tariff announcement “is very positive,” said Alan Skrainka of Cornerstone Wealth Management. “It’s showing us a thaw in what has been very icy negotiations.”

But Washington will proceed with tariffs on a host of other products starting September 1.

The stock rally was led by companies that had fallen the most after the initial tariff announcement, including toymakers, apparel companies and retailers.

Shares of Apple surged 4.2 percent, while electronics retailer Best Buy jumped 6.5 percent. Nike won 2.1 percent, Ralph Lauren 1.6 percent and toymaker Hasbro 2.8 percent. Toys and clothing also got a reprieve from the tariffs.

Sam Stovall of CFRA Research said the delay was positive, but the market reaction showed investors were still edgy.

“One tweet makes investors go from overly bearish to overly enthusiastic,” Stovall said. “It indicates to me that this market is fragile and susceptible to any changes in news.”

Trump threatened later Tuesday to pull out of the World Trade Organization, a signal that more trade-related volatility could be ahead.

He has made the WTO the target of many previous attacks, and threatened before to withdraw, claiming unfair treatment toward the US and saying Washington does not have to abide by WTO rulings.

Also of concern is burgeoning civil unrest in Hong Kong, where protests affected services for the second day in a row.