Stocks bounce back as China deal survives

Stocks closed out a solid week on Wall Street with a late-afternoon rebound after worries President Donald Trump would reignite a costly trade war with China faded.

The benchmark S&P 500 index rose 0.5%, recovering from a 1% slide, after Trump outlined several actions in response to a move by China to exert more control over Hong Kong but steered clear of upending a trade pact struck with Beijing earlier this year. The S&P 500 ended the month 4.5% higher, its second monthly gain in a row.

The world’s two largest economies agreed to a Phase 1 trade deal in January after more than a year of talks and billions in tariffs imposed on each other’s imports. Worries that the Trump administration would pull out of the deal weighed on the market for much of the day, until the president’s mid-afternoon statement.

“Much ado about nothing,” Sam Stovall, chief investment strategist at CFRA, said of the remarks. “The immediate concern, meaning the cessation of the Phase 1 (trade) accord, did not end up being put on the table.”

All told, the S&P 500 rose 14.58 points to 3,044.31. The index ended the week with a 3% gain. The Dow Jones Industrial Average fell 17.53 points, or 0.1%, to 25,383.11. The Nasdaq composite, weighted with technology stocks, gained 120.88 points, or 1.3%, to 9,489.87. The Russell 2000 index of small company stocks gave up 6.64 points.

Stocks have now recouped most of their losses after the economic fallout from the pandemic knocked the market into a breathtaking skid.