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US: Stocks jump as tariffs seen less harmful than feared
[NEW YORK] Wall Street stocks finished solidly higher Tuesday, as investors viewed the latest escalation of the US-China trade war as less consequential than feared.
The Dow Jones Industrial Average ended with a gain of 0.7 per cent at 26,246.96.
The broad-based S&P 500 rose 0.5 per cent to close at 2,904.31, while the tech-rich Nasdaq Composite Index advanced 0.8 per cent to 7,956.11.
US President Donald Trump ratcheted up pressure on Beijing, moving forward with tariffs on US$200 billion in Chinese imports. The latest round of imports will face 10 per cent tariffs through the end of the year, and then the rate will jump to 25 per cent.
China retaliated with tariffs on US$60 billion in US goods.
Analysts said investors were relieved the United States did not impose 25 per cent tariffs on the items at the outset as Mr Trump threatened to do.
"It's a sign that Trump recognises the pressure," said Karl Haeling of LBBW. "The more he raises tariffs before Christmas, the more it could increase unpopularity."
Barclays said the tariffs affect a tiny fraction of US gross domestic product, well below one per cent.
But the economic costs "are likely to be disproportionately felt by US households," Barclays said in a note.
Tesla Motors fell 3.4 per cent following reports it is under investigation by the Justice Department for fraud in connection with chief executive Elon Musk's aborted effort to take the company private.
Tesla said it was cooperating with the Justice Department, describing the interaction as a "voluntary request" and saying it had not received any subpoenas.
FedEx slid 5.5 per cent after quarterly earnings came in at US$3.46 per share, well below the US$3.80 forecast by analysts. Executives said the US-China trade conflict had not significantly affected performance but that some economic activity in China was starting to slow as a result of the impasse.
Canadian medical cannabis company Tilray surged 29.0 per cent after winning approval from US officials to import a cannabinoid study drug into the United States from Canada for a clinical trial at the University of California San Diego.