US stocks jump as tariffs seen less harmful than feared
Wall Street stocks finished solidly higher Tuesday, as investors viewed the latest escalation of the US-China trade war as less consequential than feared.
The Dow Jones Industrial Average ended with a gain of 0.7 percent at 26,246.96.
The broad-based S&P 500 rose 0.5 percent to close at 2,904.31, while the tech-rich Nasdaq Composite Index advanced 0.8 percent to 7,956.11.
US President Donald Trump ratcheted up pressure on Beijing, moving forward with tariffs on $200 billion in Chinese imports. The latest round of imports will face 10 percent tariffs through the end of the year, and then the rate will jump to 25 percent.
China retaliated with tariffs on $60 billion in US goods.
Analysts said investors were relieved the United States did not impose 25 percent tariffs on the items at the outset as Trump threatened to do.
“It’s a sign that Trump recognizes the pressure,” said Karl Haeling of LBBW. “The more he raises tariffs before Christmas, the more it could increase unpopularity.”
Barclays said the tariffs affect a tiny fraction of US gross domestic product, well below one percent.
But the economic costs “are likely to be disproportionately felt by US households,” Barclays said in a note.
Tesla Motors fell 3.4 percent following reports it is under investigation by the Justice Department for fraud in connection with chief executive Elon Musk’s aborted effort to take the company private.
Tesla said it was cooperating with the Justice Department, describing the interaction as a “voluntary request” and saying it had not received any subpoenas.
FedEx slid 5.5 percent after quarterly earnings came in at $3.46 per share, well below the $3.80 forecast by analysts. Executives said the US-China trade conflict had not significantly affected performance but that some economic activity in China was starting to slow as a result of the impasse.
Canadian medical cannabis company Tilray surged 29.0 percent after winning approval from US officials to import a cannabinoid study drug into the United States from Canada for a clinical trial at the University of California San Diego.
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