Stocks up after Trump postpones China tariff increase

Stocks closed modestly higher Monday after shedding most of the gains from an early rally spurred by the Trump administration’s decision to hold off on increasing tariffs on imported Chinese goods.

Investors welcomed the move, which averted an escalation in the damaging trade war between the world’s two largest economies. The fight is over U.S. complaints that Beijing steals technology or pressures companies to hand it over.

Traders have been growing increasingly optimistic over the last two weeks that the U.S. and China are moving closer to a resolution of their dispute. That’s helped lift stocks in recent weeks, gains which some analysts say suggest the market is already viewing an agreement as a done deal.

“You can attribute much of today’s gains to trade,” said Lindsey Bell, investment strategist at CFRA. “The closer we get to a deal getting done or some agreement being made, the smaller the gains are becoming.”

Technology companies and banks accounted for much of the market’s gains, outweighing losses in consumer goods stocks and other sectors. Oil prices fell sharply after President Donald Trump said they were getting too high. On Friday, oil closed at the highest level since mid-November.

The S&P 500 index added 3.44 points, or 0.1 percent, to 2,796.11. The benchmark index has finished higher the past four weeks in a row.

The Dow Jones Industrial average gained 60.14 points, or 0.2 percent, to 26,091.95. Earlier in the day it was up more than 209 points.

The Nasdaq composite rose 26.92 points, or 0.4 percent, to 7,554.46. The Russell 2000 index of smaller companies dropped 1.26 points, or 0.1 percent, to 1,588.81.

Progress in the U.S.-China trade talks also helped lift markets broadly in Europe and Asia, where China’s main index, the Shanghai Composite, jumped to an eight-month high.

China faced a March 2 deadline when the U.S. would have increased punitive duties on $200 billion worth of Chinese imports.

Trump, who did not set a new deadline Monday, said there had been “productive talks” on some of the more difficult issues and added he’s willing to meet with Chinese President Xi Jinping if negotiations progress.

The trade war and its hefty tariffs have already raised costs for businesses and consumers. Any additional escalation could shake investor confidence as an economic slowdown looms over China and Europe.