NEW YORK (AP) — U.S. stocks rallied in midday trading on Wall Street Tuesday after the U.S. government temporarily eased off its proposed restrictions on technology sales to Chinese companies.
Technology stocks rallied after taking steep losses Monday when the government 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 14.2% for the year.
Banks and industrial stocks also helped push the market broadly higher Tuesday. Citigroup rose 1%. Deere rose 2.4%.
Apple rose 2.1% after falling a day earlier. Boeing rose 1.3% and was the biggest driver of gains in the Dow Jones Industrial Average.
Utilities and consumer staples lagged the market as investors shifted away from those safe-play holdings and took on riskier stocks. 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 rose 0.8% as of 12:15 p.m. The Dow Jones Industrial Average rose 143 points, or 0.6%, to 25,823. The technology heavy Nasdaq composite rose 1.1%, erasing a good chunk of Monday’s losses.
RETAIL RUT: J.C. Penney fell 9.1% and Kohl’s plunged 10.8% 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 2.4% and Texas Instruments also rose 2.4%. Broadcom, which gets about half of its revenue from China, rose 1.3%. Qualcomm, which gets more than half of its revenue from China, rose 1.9%.
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.
