Stocks rebound after early tariff concerns
NEW YORK — After an early jolt, stocks rallied and finished higher Wednesday as investors bet that back-and-forth tariff threats between the U.S. and China won’t blossom into a bigger dispute that damages global commerce.
The Dow Jones industrial average plunged 501 points after the opening bell but made it all back, and more. Household goods makers, retailers and homebuilders led the way while technology companies reversed some early losses. Two major targets of China’s possible tariffs, aerospace company Boeing and farm equipment maker Deere, finished lower.
The early declines followed an announcement by the Chinese government that it plans to impose tariffs of 25 percent on a list of U.S. goods worth $50 billion, including soybeans and aircraft. The U.S. plans to place tariffs on a similar amount of Chinese goods, including industrial robots and telecom gear, subject to potential tariffs to protest Beijing’s alleged theft of U.S. technology. But investors relaxed as both sides emphasized a willingness to talk. President Donald Trump’s top economic adviser, Larry Kudlow, suggested the U.S. tariffs won’t be implemented if China lowers barriers to trade.
“The most likely outcome is smoke, but no fire,” said Bill Adams, senior international economist at PNC Financial. “The amount that both countries have invested in bilateral trade cooperation and economic cooperation is so significant that the costs of going back would be very painful, and more than either country would want to bear.”
U.S. trade policy has loomed over the markets since early March. Over the last five weeks stocks have plunged numerous times as investors reacted to tariff developments with shock and concern that an increase in protectionism will hurt international trade and company profits. Often, investors have caught their breath and decided that a full-blown trade war is unlikely, leading to recoveries.
The Dow Jones industrial average advanced 230.94 points, or 1 percent, to 24,264.30. The S&P 500 index climbed 30.24 points, or 1.2 percent, to 2,644.69. The Nasdaq composite rose 100.83 points, or 1.5 percent, to 7,042.11. The Russell 2000 index of smaller-company stocks gained 19.51 points, or 1.3 percent, to 1,531.66.