China Tariff Delay Comes to Market's Rescue

Chris Lange

The S&P 500 and Dow Jones industrials are turning it around after a two-day losing streak. This comes on the heels of news that the United States has removed some items from the list of China tariffs and delayed tariffs on others. While this is an incredible day from the broad markets, with each of these major U.S. indexes up over 1.5% on the day thus far, the tech sector is reaping the biggest benefit from this announcement, and retail is seeing a handy gain as well.

As for the China tariffs news, the U.S. Trade Representative said specifically that the United States will delay some tariffs against China until December 15. The United States also will remove “certain products” from the tariff lists on the basis of health, safety and national security. Included in the items are cell phones, laptop computers, video game consoles and footwear.

According to CNBC:

President Donald Trump abruptly ended the cease-fire with China on Aug. 1 by threatening to impose additional tariffs on Chinese imports that eluded duties in the earlier round in May. Stocks suffered their worst days of the year on Aug. 5 after China allowed its currency to drop against the dollar below a key level unseen since 2008.

In terms of the U.S. markets, the Dow Jones industrials were roughly 4% off all-time highs hit earlier this summer. The S&P 500 is about 3.3% off its highs.

The Nasdaq is having the best day out of the group, up 2% on the day. The tech-heavy index is up closer to 20% year to date.

The clear winners leading the Dow in order are Apple Inc. (NASDAQ: AAPL), Caterpillar Inc. (NYSE: CAT) and 3M Co. (NYSE: MMM), up 4.2%, 3.2% and 2.8%, respectively. Note that each of these companies has something to gain from the relaxing of these China tariffs.

Retailers also were pleased with this announcement. Best Buy Co. Inc. (NYSE: BBY), Target Corp. (NYSE: TGT) and Walmart Inc. (NYSE: WMT) each saw solid gains as well, up 5.2%, 2.8% and 2.0%, respectively. The SPDR S&P Retail ETF (NYSEARCA: XRT) is up roughly 1.6% on the day as well.