Stocks soar after tariffs delayed
U.S. to hold off on tariffs on mobile phones, toys, several other items.
— And back up goes NEW YORK the stock market.
Stocks tore higher Tuesday, continuing their roller-coaster ways, after the latest turn in the U.S.China trade war flipped investors back to buying mode. This time, it was the United States saying it would hold off on tariffs of Chinese imports of mobile phones, toys and several other items on holiday shopping lists until Dec. 15. China also said its negotiators had spoken with U.S. officials about the tariffs that President Donald Trump threatened to impose on Sept. 1, and they planned to talk again in the next two weeks.
The S&P 500 burst higher immediately after the announcements, and it was on pace for one of its best days in months. It was up 1.5%, as of 11:16 a.m. Eastern time and earlier had been up as much as 2.1%. The Dow Jones Industrial Average rose 390 points, or 1.5%, to 26,288, and the Nasdaq composite jumped 1.9%.
It’s just the latest turn for markets, which have been in the spin cycle since Trump announced on Aug. 1 that he would impose 10% tariffs on about $300 billion in Chinese imports, which would be on top of tariffs already on $250 billion of imports. The threat dashed hopes that a resolution may come soon in the trade war between the world’s two largest economies, and investors have grown increasingly concerned that it may drag through the U.S. elections in 2020.
While stocks have jostled up and down, Treasury yields have sunk, and gold prices have jumped as investors searched for safety on worries the trade war could knock the U.S. economy back into recession for the first time in a decade. The yield on the 10-year Treasury rose Tuesday, but it remains below its level when Trump’s 2016 election invigorated markets.
Retailers were some of Tuesday’s best performers because the delay in tariffs means they won’t have to raise prices on toys, clothing and other items during the holiday shopping season, the most important months of the year for the industry. Best Buy jumped 5%, one of the biggest gains in the S&P 500, and Dollar Tree rose 3.7% for its best day since March.
“This is a huge relief for retailers for the holiday 2019 season, but the larger issue isn’t over,” said Ken Perkins, president of RetailMetrics, a retail research firm. “Retailers better be planning to diversify their sourcing even though they’re getting some short-term relief.”