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Wall St lifts as tariff delay sparks rally

Stephen Culp

US stocks have closed higher after an announced delay of planned tariffs on some Chinese imports brought buyers back to the equities market in a broad-based rally.

Tech stocks, headed up by Apple, led all three major US indexes into the black following the announcement, which calmed fears over the US-China trade war and growing signs of imminent recession.

US Trade Representative Robert Lighthizer said the United States would hold off on imposing additional 10 per cent tariffs on key Chinese goods, including laptops and mobile phones - tariffs that were originally set to go into effect next month.

Joseph Sroka, chief investment officer at NovaPoint in Atlanta, said there was a stemming of the market's downward momentum due to trade optimism.

"We're getting into the tail end of earnings season, so geopolitical and macroeconomic news will dominate the market's direction for the next few weeks," he said.

Apple, a likely beneficiary of the tariff delay, rose 4.2 per cent on Nasaq on Tuesday, while the Philadelphia SE Semiconductor Index gained three per cent.

In economic news, US consumer prices accelerated in July, with core CPI, which strips out volatile food and energy prices, growing at 2.2 per cent year-on-year, its largest gain in six months and well above the US Federal Reserve's two per cent target.

The healthy inflation reading is unlikely to change market expectations for another interest rate cut from the Fed next month as it grapples with the US-China trade war and its economic fallout.

"Trade issues could really disrupt economic growth," Sroka said.

"And if the Fed cuts (interest) rates in September, it could be considered a safety net, to be proactive rather than waiting until it's too late."

The spread between two-year and 10-year US Treasuries hit its flattest level in 12 years, reflecting anxieties over trade and geopolitical turmoil. But yields rose across the board on news of the tariff delay.

The Dow Jones Industrial Average rose 372.54 points, or 1.44 per cent, to 26,279.91, the S&P 500 gained 42.48 points, or 1.47 per cent, to 2926.23 and the Nasdaq Composite added 152.95 points, or 1.95 per cent, to 8016.36.

All of the 11 major sectors in the S&P 500 closed in the black, with technology and consumer discretionary seeing the biggest percentage gains.

Toys and footwear were among the Chinese goods temporarily spared from additional tariffs.

Nike rose two per cent, while toymakers Hasbro and Mattel advanced 2.7 per cent and 4.6 per cent, respectively.

Facebook pared gains following a Bloomberg report that the social media company had hired outside contractors to transcribe user audio clips, ending up 1.7 per cent.

Shares of CBS and Viacom gained 1.4 per cent and 2.4 per cent respectively after sources told Reuters the companies had reached an agreement in principle regarding their impending merger.

The second-quarter earnings season has reached the final stretch, with 453 of the companies in the S&P 500 having posted results.

Of those, 73.3 per cent beat consensus estimates, according to Refinitiv data.

Analysts see S&P 500 second-quarter earnings growth of 2.9 per cent year-on-year, a significant improvement over the paltry 0.3 per cent growth expected on July 1, per Refinitiv.

Advancing issues outnumbered declining ones on the NYSE by a 2.46-to-1 ratio; on Nasdaq, a 2.3-to-1 ratio favoured advancers.

The S&P 500 posted 31 new 52-week highs and 18 new lows; the Nasdaq Composite recorded 60 new highs and 128 new lows.

Volume on US exchanges was 7.95 billion shares, compared with the 7.34 billion-share average over the last 20 trading days.