(Reuters) – U.S. stocks moved higher on Tuesday, led by a strong rebound in trade-sensitive chipmakers after Washington cut off a Chinese semiconductor maker from its U.S. suppliers.
A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., October 29, 2018. REUTERS/Brendan McDermid
The Commerce Department slapped the restriction on Fujian Jinhua Integrated Circuit Co Ltd amid allegations the firm stole intellectual property from Micron Technology Inc and on concerns the firm could flood the market with cheap chips.
Micron rose 1.4 percent, and helped the Philadelphia Semiconductor Index jump 2.50 percent, rebounding after hitting its lowest in over a year on Monday. The broader technology sector was up 0.42 percent.
Industrial stocks rose 0.73 percent, getting a boost after President Donald Trump said “a great deal” on trade can be struck with China.
But he also warned that billions of dollars worth of new tariffs are ready if a deal isn’t possible. That echoed the essence of a Bloomberg report on Monday that sent Wall Street tumbling at close.
“Markets have been on that mode where we sell-off and then see a day of recovery,” said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.
“Positive news on trade is providing a little bit of a lift and investors are looking at some upbeat earnings to gauge how sustainable it is for companies to keep it going.”
Tariffs and rising costs have been among the factors that have prompted a slew of disappointing forecasts from major industrials, chipmakers and other companies, adding worries over slowing corporate growth to fears of faltering global growth.
Traders have also said the uncertainty regarding the mid-term elections next week has also been a factor for the recent volatility.
At 11:59 a.m. ET the Dow Jones Industrial Average was up 187.83 points, or 0.77 percent, at 24,630.75, the S&P 500 was up 19.86 points, or 0.75 percent, at 2,661.11 and the Nasdaq Composite was up 66.87 points, or 0.95 percent, at 7,117.17.
On the earnings front, Coca-Cola Co shares climbed 1.2 percent after beating quarterly sales estimates, while rival PepsiCo Inc inched up 0.6 percent.
But, Pfizer Inc fell 1.5 percent after cutting its full-year revenue forecast, citing a stronger dollar and lower revenue from its sterile-injections business.
Under Armour Inc surged 25.3 percent after beating quarterly estimates and raising its full-year profit forecast on higher overseas sales and lower expenses. Nike Inc rose 2.7 percent.
Facebook was up 1.2 percent ahead of its quarterly earnings report, which is due after the market closes.
Advancing issues outnumbered decliners by a 2.10-to-1 ratio on the NYSE. Advancing issues outnumbered decliners by a 2.14-to-1 ratio on the Nasdaq.
The S&P index recorded 10 new 52-week highs and 19 new lows, while the Nasdaq recorded 12 new highs and 142 new lows.
Reporting by Shreyashi Sanyal in Bengaluru; Editing by Bernard Orr and Sriraj Kalluvila