Dow Jones Bounces Back on Possible U.S. China Deal

U.S. stocks bounced back on Tuesday after reports that U.S. and China trade relations could be improving, sending stocks surging early on.

The Dow Jones Industrial plunged by 520 points to its low on Monday, but quickly rebounded throughout the day. The Dow Jones opened higher on Tuesday at 24,762.74 or gained 311.92 points. The S&P 500 Index gained 31.35 points from Monday’s close, while the Nasdaq Composite gained 86.12 points.

The uplifting news on Tuesday shortly suppressed Qualcomm’s (NASDAQ: QCOM) announcement on Monday that Apple (NASDAQ: AAPL) violated two patent infringements. Apple’s violation now bans sales of older iPhone models, up to the iPhone X, in China.

Bloomberg News reported on Tuesday that China is moving towards cutting tariffs on vehicles made in the U.S. to 15% from the current 40%, sending automaker stocks higher. The proposal was submitted to the Chinese Cabinet and will be under review in the coming days, according to the report. Ford (NYSE: F) gained 2%, while General Motors (NYSE: GM) gained 3.1%.

“Very productive conversations going on with China! Watch for some important announcements!” tweeted U.S. President Donald Trump early morning on Tuesday.

Chinese Vice Premier Liu also reportedly said on Tuesday that he had been in discussion with U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer in efforts to de-escalating rising global trade tensions.

“There are two major factors here: a new level of trade talks is under way, and the number of bearish market calls got significantly higher,” said Peter Cardillo, Chief Market Economist at Spartan Capital Securities. “That usually signals the end to an ongoing sell-off. I think this rally could go on through the end of the year.”

Despite the reports between the U.S. and China, fear is still in the air amid trade tensions. Last week, Trump and Chinese President Xi Jinping met during the G20 Summit to discuss trade matters, which were short lived. The announcement sent U.S. markets surging on Monday, before quickly falling into bearish terrority last week. Markets continued to fall last week following the arrest of Huawei’s executive Meng Wanzhou in Canada.

6 Comments
  1. Vanessa Louie 6 months ago
    Reply

    this trade war is making the market very volatile, best liquidate your longterm positions

    • Ross Gerber 6 months ago
      Reply

      the market is unpredictable, makes trading a bit more exciting

  2. James Schwarz 6 months ago
    Reply

    I am anticipating another drop coming, Amazon should re-test $1500 support. Where it goes from there is unknown.

    • Ophir Gottlieb 6 months ago
      Reply

      In panicky markets we like the idea that $SPY would overshoot and breakdown and real bounce comes when leader $QQQ finally hits support 156

      • Tom Watson 6 months ago
        Reply

        just a small bounce, we are definitely going to test that soon, maybe next week

  3. Christine Murray 6 months ago
    Reply

    I’m more worried about whether or not Trump is going to go on with the government shutdown

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