The market opened higher on Tuesday, recovering from overnight losses after White House trade adviser Peter Navarro walked back his earlier comments that the U.S.-China trade deal is “over.”
The Dow Jones Industrial Average was up 0.8%, around 200 points, at Tuesday’s open, while the S&P 500 rose 0.7% and the tech-heavy Nasdaq Composite gained 0.7%.
Stock futures plunged overnight, with the Dow dropping by around 400 points, after trade adviser Peter Navarro told Fox News that the China trade deal is “over,” and the “turning point” came when the United States learned about the coronavirus outbreak in China.
But Navarro quickly walked back his statement, insisting that his comments were “taken wildly out of context” and the Phase 1 trade deal “continues in place.”
President Donald Trump also separately confirmed on Twitter that the existing trade deal with China is still “fully intact.”
The market continues to move higher despite fears of a resurgence in coronavirus infections across the country: Many states reopening—such as Arizona, Texas, Florida and California—have recently seen record numbers of new cases.
Shares of companies that would benefit from the economy reopening—including retailers and cruise operators—jumped again on Tuesday, while bank stocks also rose broadly.
“Trying to read the tea-leaves in the ongoing saga between the U.S. and China has become increasingly difficult these days,” according to a note from Bespoke Investment Group. “After all the overnight ups and downs, futures are actually higher now than they were before Navarro made his comments.”
What to watch for
President Trump is apparently in favor of sending out a second round of stimulus checks as the country continues to battle the coronavirus recession, according to a report from the Washington Post. But another round of stimulus is unlikely to pass until sometime in July, and Congressional Republicans may not get on board with more stimulus this time, according to the report. White House economic advisor Larry Kudlow told CNBC on Monday that “there is no second wave [of coronavirus],” and that lawmakers are working on releasing another stimulus package by the end of next month.
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