A trade dispute between the US and China escalated on Friday, but Wall Street focused on a solid jobs report instead.
After a wobbly start, US stocks mounted a broad rally, shaking off two consecutive weekly losses.
Growing jitters over the past few weeks over a stepped-up trading dispute between the world’s two largest economies had weighed on the markets well ahead of Friday, when Beijing and Washington launched dueling tariffs on billions in goods.
“The markets had already sold off the prior two weeks,” US Bank Wealth Management national investment consultant Dan Heckman said. “The market probably had built that expectation in already and today we’re seeing a nice rebound.”
A solid pickup in hiring by US employers last month also helped keep investors in a buying mood.
The S&P 500 on Friday rose 23.21 points, or 0.8 percent, to 2,759.82, an increase of 1.5 percent from a close of 2,718.37 on June 29.
The Dow Jones Industrial Average on Friday gained 99.74 points, or 0.4 percent, to close at 24,456.48, up 0.8 percent from 24,271.41 a week earlier.
The NASDAQ Composite on Friday added 101.96 points, or 1.3 percent, to 7,688.39, rising 2.4 percent from 7,510.30 on June 29.
The Russell 2000 index of smaller-company stocks on Friday picked up 14.57 points, or 0.9 percent, to end at 1,694.05, jumping 3.1 percent from a close of 1,643.07 a week earlier.
The US on Friday put a 25 percent tax on US$34 billion of Chinese imports.
China retaliated with taxes on an equal amount of US products, including soybeans, pork and electric cars, calling the move the start of the “biggest trade war in economic history.”
Although the first exchange of tariffs is unlikely to inflict much economic harm on either nation, the damage could soon escalate.
US President Donald Trump, who has claimed that winning a trade war would be easy, has said that he is prepared to drastically raise tariffs on more Chinese imports.
Mounting tariffs could raise costs across the board for consumers and businesses, slowing growth and investment and hurting companies that rely on imported parts to make their goods.
Despite the market’s gains on Friday, much damage has already been inflicted on stocks that would stand to lose in a protracted trade battle with China.
US companies that do a lot of business there have seen steep drops in their stock prices over the past few weeks.
Aircraft maker Boeing Co, which relies on China for 12.3 percent of its sales, according to FactSet Research Systems Inc, has seen its stock fall 9.9 percent over the past month as the trade tensions with China worsened.
Heavy equipment maker Caterpillar Inc, for whom China is also its second-biggest market after the US, has fallen 13.5 percent over the same period.
Liquor maker Brown-Forman Corp, whose products include Jack Daniels, is off 15 percent since late May.
Whiskey, along with soybeans, pork and cheese, is among the products on which China has slapped retaliatory tariffs.
As the prospect of Chinese tariffs on soybeans grew over the past few weeks, the price of soybeans has fallen sharply.
Soybean futures have fallen from US$10.42 per bushel in late May to US$8.95 on Friday, a drop of 14 percent.
That hurts US soybean farmers and could also have an impact on makers of farm equipment, such as Deere & Co, whose stock has fallen 11.7 percent over the past month.
Last year, China bought 30 percent of the soybeans produced in the US.
“The market is counting on this to subside,” Wells Fargo Private Bank chief investment officer Erik Davidson said. “If they get an indication that this will continue to escalate, that will cause some problems.”
Investors on Friday also welcomed new data from the government showing that US employers kept up a brisk pace of hiring last month, without having to hike wages much.
Markets have been watching to see if tight labor market conditions would force wages higher, a sign of inflation.
The US Department of Labor said that US employers added 213,000 jobs last month, while average hourly pay rose just 2.7 percent from a year earlier, which means that after, adjusting for inflation, wages remained nearly flat.
Healthcare stocks posted the biggest gains, led by Biogen Inc. The drugmaker’s stock soared 19.6 percent to US$357.48 on encouraging results from an Alzheimer’s therapy.
Technology companies also notched solid gains, with Advanced Micro Devices Inc rising 5.6 percent to US$16.36.
Additional reporting by staff writer
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