U.S. stocks climb as China eases trade tensions

Stocks notched broad gains Wednesday on Wall Street as investors drew encouragement from China’s move to exempt some U.S. products from a recent round of tariffs.

Technology, health care and communication services stocks powered much of the rally. The benchmark S&P 500 index, which had been essentially flat since Friday, is on track for its third-straight weekly gain.

The S&P 500 rose 21.54 points, or 0.7%, to 3,000.93. It’s the first time the index has finished above 3,000 points since July 30.

The Dow Jones industrial average gained 227.61 points, or 0.8%, to 27,137.04. The Nasdaq picked up 85.52 points, or 1.1%, to 8,169.68.

The Russell 2000 index of smaller-company stocks outpaced the broader market, climbing 32.72 points, or 2.1%, to 1,575.71.

Bond yields continued to climb. Oil prices fell, and investors also continued to favor smaller-company stocks.

Wednesday’s push into technology companies marked a reversal from the first couple of days of the week, when traders bid up energy, financials and other sectors that had sold off in recent weeks. The tech sector is particularly sensitive to fallout from the trade war between Washington and Beijing because many big companies, such as Apple, manufacture products in China.

“Today you have a little bit of a rotation back,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management. “You’re getting some movement that trade may not be as bad as we think, with China relieving some of the restrictions on its own tariffs.”

Major indexes in Europe also finished broadly higher.

Bond prices fell. The yield on the 10-year Treasury note rose to 1.75% from 1.70% late Tuesday.

Financial markets have been roiled this summer as the trade war escalated. Investors worry the impact of tariffs and a slowing global economy could tip the U.S. into a recession. The economic uncertainty has also become a drag on companies.

Some of those trade concerns appeared to ease Wednesday after China said that it will exempt American industrial grease and some other imports from tariff increases, though it kept in place penalties on soybeans and other major U.S. exports ahead of negotiations next month.

Investors continue to expect the Federal Reserve will cut interest rates at its meeting next week in another bid by the central bank to help maintain U.S. economic growth. The Fed lowered its benchmark interest rate in July by a quarter point. That was its first decrease in a decade. Despite a rough-and-tumble August, the stock market is off to a solid September, with the S&P 500 coming off two weeks of gains.

The Russell 2000 is the clear winner midway into this week, boasting a 4.7% gain. Smaller companies within the index are viewed as more insulated from the impact of volatile swings in the U.S.China trade war. They are also less affected by a stronger U.S. dollar than multinational companies.

“The stronger dollar does tend to mean domestic companies that are wholly domestic are going to do better,” said Haworth.

Apple was among the big gainers as investors snapped up technology stocks. Shares in the iPhone maker, which unveiled a variety of new products and services on Tuesday, climbed 3.2%. Chipmaker Intel gained 1.9%.

Health care and communications stocks also made strong gains. Medtronic rose 1.1% and AT&T climbed 3.1%.

Shares in tobacco giants Altria Group and Philip Morris International rose after a brief slide after President Donald Trump’s administration’s announcement that it is looking to ban thousands of flavors used in e-cigarettes after an outbreak of breathing problems tied to vaping.