Stocks marched broadly higher on Wall Street in late-afternoon trading Tuesday, placing the market on track to snap a two-day losing streak.
The rally followed the U.S. government’s decision to temporarily ease off proposed restrictions on technology sales to Chinese companies. The news gave a boost to technology sector stocks, which took steep losses a day earlier when the Trump administration announced curbs on technology sales, aimed primarily at Chinese telecom gear maker Huawei.
About one-third of that company’s suppliers are American chipmakers and the move would crimp sales for companies including Qualcomm and Broadcom. Both companies posted gains Tuesday, along with other chipmakers.
The U.S. government’s decision to issue a 90-day grace period on technology sales to Huawei, ZTE and other Chinese companies also relieves some worry on Wall Street about yet another escalation in the trade war between the U.S. and China. The heightened tensions over trade have put the market in a rut for the last two weeks — the S&P 500 is down 2.8% for May, although the index still shows a gain of 14.3% for the year.
Health care, financial and industrial stocks also helped drive the market higher Tuesday. Anthem rose 4.2%, Wells Fargo added 1.7% and Boeing gained 1.3%. Household goods makers lagged. Tyson Foods slid 1.9%.
Apple rebounded 2.3% after falling a day earlier. It was the biggest driver of gains in the Dow Jones Industrial Average.
Gains in consumer-oriented stocks were being held back by disappointing financial results from department stores J.C. Penney and Kohl’s.
The latest corporate results nearly cap off an earnings season that has been mixed, but better than Wall Street initially feared. The key concern the companies faced a severe earnings recession has been averted.
KEEPING SCORE: The S&P 500 index was up 0.9% as of 3:21 p.m. Eastern Time. The Dow rose 184 points, or 0.7%, to 25,864. The technology heavy Nasdaq composite climbed 1.1%, erasing a good chunk of Monday’s losses.
Major stock indexes in Europe rose.
TRADE ROLLER COASTER: The temporary grace period on new U.S. restrictions on Huwei could be renewed, the government said. That could be feeding traders’ cautious optimism as they await progress in trade talks between Washington and Beijing.
“I’m a bit surprised that the bounce back has been as strong as it has been,” said Randy Frederick, vice president of trading & derivatives at Charles Schwab. “It speaks to the fact that we’re still in a bull market and, in general, the economics are still pretty solid, and the markets are happy to move up on any sort of positive news, especially if it looks constructive toward trade.”
RETAIL RUT: J.C. Penney slid 7.8% and Kohl’s plunged 11.5% after reporting disappointing first quarter financial results.
Struggling department store operator J.C. Penney reported declining sales and a surprisingly wide loss. The retailer attributed part of the weak quarter to its no longer selling major appliances and furniture.
Kohl’s also fell short of forecasts as it deals with slumping sales. The company also cut its profit forecast for the year.
Department stores have been dealing with increased competition from off-price stores and the constant growth of online shopping.
RECOVERY MODE: Chipmakers reversed course and gained ground on reports the U.S. is easing off sales restrictions to China.
Intel rose 2.1% and Texas Instruments also added 2.1%. Broadcom, which gets about half of its revenue from China, gained 1%. Qualcomm, which gets more than half of its revenue from China, rose 1.7%.
Technology stocks, and chipmakers in particular, have already been under increased pressure because of the ongoing trade war. The latest move to restrict some technology sales could cut into key revenue sources.