By CCN.com: The Dow sped toward a fabulous recovery on Tuesday after the Chinese government appeared to make a stunning reversal to its suddenly-hostile trade war strategy, reigniting hopes that Donald Trump and Xi Jinping will shake hands on a trade agreement at the upcoming G-20 summit.
All of Wall Street’s major indices recorded tantalizing recoveries. As of 2:04 pm ET, the Dow Jones Industrial Average had jumped by 454.33 points or 1.83%; the rally launched the DJIA to 25,274.11.
The S&P 500 rallied 50.99 points or 1.86% to 2,795.44.
Even the Nasdaq surged, brushing off concerns about Justice Department investigations into key Silicon Valley behemoths. The tech-heavy index rose 171.49 points or 2.34% to 7,504.51.
Stock futures surged in pre-market trading after China’s Ministry of Commerce issued a statement that unexpectedly advocated for Beijing and Washington to return to the negotiating table.
“The Chinese side always believes that the differences and frictions between the two sides in the economic and trade field will ultimately need to be resolved through dialogue and consultation,” the statement said, according to a CNBC translation.
The Commerce Ministry’s conciliatory statement blindsided many Wall Street bears. Pessimists had been especially perplexed after Beijing published a whitepaper outlining the fraught state of the trade war negotiations.
Contrary to Trump’s claim that China “broke the deal,” the report blamed the United States for the stalemate and appeared to indicate that the White House could not be trusted. Combined with other ominous developments, the whitepaper did not kindle optimism about an impending resolution.
However, according to a report in the South China Morning Post, Western readers might have misinterpreted that seemingly-bombastic whitepaper. Far from merely playing the “blame game,” analysts allege that Beijing published the whitepaper to lay out its position in anticipation of resuming negotiations with the United States.
“No matter if others buy it or not, it’s important to state your position,” said Wang Huiyao, founder and president of Beijing-based non-governmental think tank the Centre for China and Globalisation. “China has not been doing much in this regard and we are now learning how to catch up [with the US] in communicating our position to the rest of the world.”
While it’s clear that an ocean-sized gap separates the two economic superpowers, China’s willingness to return to the negotiating table reignited hopes that Presidents Trump and Xi will strike an agreement at the G-20 summit later this month.
There’s little chance that deal will bring a full resolution to the long-simmering trade conflict, but Wall Street would welcome any cessation to the hostilities, especially if Trump eases pressure on the US economy by halting planned tariff increases on Chinese imports.
Tuesday’s bullish pivot brought a welcome recovery to the stock market, which just closed the book on its first May loss since 2012.
On Monday, a volatile Dow seesawed its way to 24,819.78, closing the session with a muted 4.47 point or 0.02% percent gain. The S&P 500 lost 7.61 points or 0.28% and fell to 2,744.45, while the Nasdaq plummeted by 120.13 points or 1.61% to 7,333.02 following a report that the Justice Department will launch antitrust investigations into key FANG stocks.
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Last modified: July 2, 2020 7:56 PM UTC