Wall Street stocks surged to on Tuesday, with an upbeat sentiment in the market driving shares higher from the lows of the last month.
Fed Chairman Jerome Powell acknowledged that the central bank could consider rate cuts to help the U.S. economy, while trade tensions looked to ease down after positive comments from Chinese and Mexican officials.
The Dow Jones Industrial Average (DJIA) soared 512.40 points or 2.06% to 25,332.18.
The S&P 500 climbed 58.82 points or 2.14% to 2,803.27 up from the previous close at 2,744.45. The Nasdaq Composite also surged, climbing 194.10 points or 2.65% to 7,527.12.
All the major indexes closed higher on the day, the second-best performance of the day, year-to-date. most stocks rallied into the close as increased speculation had it that Republican lawmakers were would to block U.S. President Donald Trump’s push for the implementation of the new Mexican tariffs.
Fed Chairman Powell had earlier said that they were monitoring the global trade outlook and would “act as appropriate” in efforts to accommodate the implications of the current trade tensions. Powell’s comments come at a time there have been increased expectations that the Fed will implement rate cuts in 2019. The CME Group’s Fedwatch indicator points to higher chances for one in September (90%) and another in December (80%).
The big moves on Tuesday came on the back of Monday’s declines following news that U.S. regulators and legislators were looking to act tough in various probes on big tech companies. Shares of the big four tech sector companies Alphabet, Apple, Amazon, and Facebook had all put pressure on the Nasdaq on Monday.
But shares of Amazon, Apple, and Alphabet all traded higher on Tuesday to help push the market into the green.
Comments from the Chinese Commerce Ministry on Tuesday were also positive, with a statement noting that whatever frictions the trade war was causing needed to be “dealt with through talks.” Wall Street cheered on that, taken as a potential signal that China was toning down the tough rhetoric witnessed in May.
The past month saw stocks take a battering as trade tensions heightened, with the S&P 500 declining more than 5% and the Dow 4.6%. The biggest drop was on the Nasdaq, which is down over 8% in that period.