Stocks soared on Tuesday after the U.S. decided to delay tariffs on certain Chinese goods while outright removing some items from the tariff list, reigniting hopes Washington and Beijing could reach a long-term resolution.
The Dow Jones Industrial Average, which jumped as much as 529 points, finished the day 372.54 points higher, or 1.44%, at 26,279.91. The S&P 500 rose 42.57 points or 1.48% to 2,926.32 and the Nasdaq Composite was 1.95% higher to 8,016.36, led by Apple which surged more than 4%.
The United States Trade Representative announced Tuesday certain products including clothing and cellphones are being removed from the tariff list based on “health, safety, national security and other factors” and will not face additional tariffs of 10%. Other tariffs will be delayed to Dec. 15 from Sep. 1 for certain articles, it said.
“Products in this group include, for example, cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing,” the statement from the USTR said.
Retailers cheered the potential delayed rise in costs for apparel and electronics. Best Buy soared more than 6%, while Nike jumped 2% and Nordstrom also rose nearly 2%. The SPDR S&P Retail ETF is up 1.6% on the day.
President Donald Trump said Tuesday he delayed the tariffs ahead of Christmas season to avoid potential impact on holiday shopping. He added China would very much like to make a trade deal.
“While the U.S.-China developments this morning are positive, keep in mind that even if the 9/1 tariffs are completely abandoned, the S&P 500 will still struggle to get above 3,000,” Adam Crisafulli, a J.P. Morgan managing director, said in a note on Tuesday. “The next big steps on the U.S.-China relationship front concerns Huawei and agriculture.”
Trump abruptly ended the cease-fire with China on Aug. 1 by threatening to impose additional tariffs on Chinese imports that eluded duties in the earlier round in May. Stocks suffered their worst days of the year on Aug. 5 after China allowed its currency to drop against the dollar below a key level unseen since 2008.
Trade negotiators from the U.S. and China held phone conversations on Tuesday and agreed to discuss again in two weeks, China state-run media Xinhua reported Tuesday.