NEW YORK (Reuters) - U.S. stocks jumped more than 1 percent on Tuesday, bouncing back from a sharp sell-off the previous day as China stepped in to stabilize the yuan, easing concerns that currencies would be the next weapon in the U.S.-China trade war.
China’s overnight intervention came after the U.S. Treasury Department labeled Beijing a currency manipulator as it let the yuan slide to a more than decade low on Monday.
“It’s a signal from the Chinese side that they want to keep the yuan steady and elevated. But it also indicates how quickly things can change. That’s permeating the tone in the market, and it’s one of the reasons there remains that sense of trepidation,” said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.
The gains came a day after U.S. stocks’ biggest percentage drop of the year and a sharp fall in the Chinese currency.
China’s move to fix the yuan at a slightly stronger rate and White House economic adviser Larry Kudlow’s comment that President Donald Trump was planning to host a Chinese delegation for talks in September allayed fears of a further escalation in the trade war.
The S&P technology index .SPLRCT, which includes companies that have a big exposure to China and were at the heart of Monday’s sell-off, provided the biggest boost to the S&P index, rising 1.61%.
The Dow Jones Industrial Average .DJI rose 311.78 points, or 1.21%, to 26,029.52, the S&P 500 .SPX gained 37.03 points, or 1.30%, to 2,881.77 and the Nasdaq Composite .IXIC added 107.23 points, or 1.39%, to 7,833.27.
The S&P 500 .SPX and Nasdaq .IXIC each snapped a six-day losing streak. Stocks had been reeling from last week's shock when Trump vowed to slap a 10% tariff on a further $300 billion in imports from China.
After the bell, shares of Walt Disney (DIS.N) fell 2.6% following the release of its quarterly results.
During the regular session, Apple Inc (AAPL.O) gained 1.9% after recent heavy losses, while the Philadelphia Semiconductor index .SOX edged 1.28% higher.
Among other stocks, Take-Two Interactive Software Inc (TTWO.O) jumped 8.0% after the videogame publisher raised its full-year revenue forecast.
Advancing issues outnumbered declining ones on the NYSE by a 2.17-to-1 ratio; on Nasdaq, a 1.85-to-1 ratio favored advancers.
The S&P 500 posted five new 52-week highs and 24 new lows; the Nasdaq Composite recorded 21 new highs and 198 new lows.
Volume on U.S. exchanges was 7.93 billion shares, compared with the 6.91 billion average for the full session over the last 20 trading days.
Additional reporting by Medha Singh and Arjun Panchadar in Bengaluru; Editing by Anil D'Silva, Arun Koyyur and Dan Grebler