NEW YORK (AP) — Stocks scrambled higher Tuesday and clawed back much of their losses from Monday's rout, the latest whipsaw move as investors weigh just how badly the escalating U.S.-China trade war will hurt the economy.
The S&P 500 and other indexes rose as soon as markets opened, and the gains accelerated as the day progressed. Tuesday's market movements were a nearly mirror image of Monday's plunge, just not as severe: Technology companies led the way higher after bearing the brunt of the selling on Monday, Treasury yields rose modestly and gold gave back a bit of its gains. Caterpillar, JPMorgan Chase and other stocks recovered about half of their losses from the day before.
Of course, stocks are still lower than they were last week, after the S&P 500 had its worst day in four months on Monday following China's pledge to raise tariffs on U.S. goods. Stocks also remain lower than they were on May 5, when President Donald Trump ignited this latest round of fear for markets by announcing on Twitter that the U.S. would raise tariffs on Chinese goods.
Tuesday's gains for stocks came after another round of morning Trump tweets on trade. He said, "When the time is right we will make a deal with China," and he cited his "unlimited" respect for and friendship with China's leader.
The worries about trade have shattered what had been a remarkably steady rise for stocks at the start of this year. As 2019 began, investors increasingly bet that a trade deal would happen, and the Federal Reserve said it would take a pause in raising interest rates, which helped the S&P 500 rocket to its best start to a year in decades.
If the trade dispute gets worse, or lasts longer than many expect, the concern is that it would hit confidence among businesses and households. If that in turn convinces them to hold off spending, it would lead to lower economic growth and corporate profits.
KEEPING SCORE: The S&P 500 was up 1.4%, as of 2 p.m. Eastern time. Its gain of 39 points erased more than half of its loss of 69.54 points on Monday and brought it to within 3.2% of its record set a couple weeks ago.
The Dow Jones Industrial Average climbed 350 points, or 1.4%, to 25,675, and the Nasdaq composite index jumped 1.7%.
INVESTORS' TAKE: The market is looking for a "place of equilibrium" following Monday's rout amid lingering anxiety over international trade, according to Mark Hackett, chief of investment research for Nationwide Investment Management.
"My skepticism is that there's really not a lot of news driving the rally," he said. "It feels like an attempted recovery that may not have legs."
Investors are essentially just cautiously waiting for any further developments in the trade dispute between the U.S. and China.
"We're not counting on a full resolution," said John Lynch, chief investment strategist at LPL Financial. "But, we're looking for a path to progress."
FEAR GAUGE: The change in mood for the market over just one day is stark. An index known as Wall Street's "fear gauge," which measures how much traders are paying to protect themselves from upcoming price swings for stocks, dropped 13.2%. A day earlier, it had spiked 28.1 %.
The VIX index remains higher than it's been for much of the past five years, but fear is considerably lower than it was during the market sell-off late last year sparked by worries about a possible recession.
TECH LEADS THE WAY: Investors see technology companies as having the most to lose from a protracted U.S.-China trade battle because many of their customers and suppliers are abroad. Tech stocks in the S&P 500 leaped 2.2%, with semiconductor companies making particularly big gains. Advanced Micro Devices surged 3.7%, and Applied Materials jumped 2.7%.
A day earlier, tech stocks had taken the market's heaviest losses.
WHO NEEDS SAFETY: Utilities were the only one of 11 sectors that make up the S&P 500 to fall. They dropped 0.6%.
A day earlier, when all the fear in the market put an alluring spotlight on the utility sector's steady profits and dividends, they had been the only S&P 500 sector to manage a gain.
PROFIT GAINS: Video game maker Take-Two Interactive Software rose 5.3% after its profit for the latest quarter beat Wall Street forecasts.
Companies in the S&P 500 are nearly done reporting their results for the first three months of the year, and they've largely been better than expected. Wall Street was forecasting a drop of 4% in earnings per share, according to FactSet, but S&P 500 companies may end up reporting flat results from a year earlier.
MOUSE HOUSE EXPANSION: Disney rose 2.1% after announcing a deal with Comcast to take full control of the video streaming service Hulu. Disney and other media companies have been making big efforts to get into video streaming in order to meet the challenge posed by Netflix. Comcast rose 2.2%.
HOLES IN THE FABRIC: Ralph Lauren fell 4.2% after investors focused on a drop in revenue from the upscale clothing company's key market in North America. The downturn in regional sales helped weigh down overall revenue, though profit and revenue still beat analyst forecasts for the quarter.
TREASURY YIELDS: Less fear in the market means less demand for safe investments, such as U.S. government bonds. When a bond's price falls, its yield rises, and the yield on the 10-year Treasury climbed to 2.42% from 2.40% late Monday.
It recovered nearly half of its 0.05 percentage point drop from Monday.
COMMODITIES: Gold is another investment that tends to do well when investors are feeling scared. It rose Monday, but fell $5.50 to settle at $1,296.30 per ounce.
Silver rose 4 cents to $14.81 per ounce, and copper gained a penny to $2.73 per pound.
Benchmark U.S. oil rose 77 cents, or 1.3%, to $61.81 per barrel. Brent crude, the international standard, gained $1.10 to $71.33.