Trade tensions down, stocks up

Stocks rallied as trade tensions appeared to ease after China held off from immediately retaliating against the latest U.S. salvo. The dollar declined.

The S&P 500 Index closed at the highest level since February as China seemed to strike a conciliatory tone in reaction to President Donald Trump’s newest escalation of the trade war between the two countries. Technology shares led gains, sending the Nasdaq Composite Index to a record.

Ten-year Treasury yields traded little changed, and the dollar dropped against most peers after U.S. consumer prices rose less than forecast in June. West Texas crude fell to $70 a barrel.

While markets welcome the lull in the trade war, they’ll remain on edge as they await a potential reprisal from Beijing to Trump’s latest volley. Investors concerns had overshadowed economic data hinting that global growth is on track as well as the start of earnings season.

“What’s going on in the market right now is the tariffs are lending a tremendous amount of uncertainty,” Dave Haviland, managing partner of Beaumont Capital Management in Needham, Mass., said by phone. “It’s the day-today back and forth, markets tend to overreact or react emotionally to news. This whole cauldron that is swirling around, all these worries and uncertainties are really causing this daily tug-of-war.”

Elsewhere, Turkey’s lira recovered from a record low. The won fell, with little reaction to the Bank of Korea holding its benchmark rate at 1.5 percent.