New York: US stock indexes rose in a broad-based rally on Tuesday, as Washington’s decision to temporarily ease curbs on China’s Huawei Technologies allayed concerns over a further escalation in trade war between the two countries.
Chipmakers, which bore the brunt of Monday’s sell-off, rose after the United States granted the Chinese telecoms equipment maker a licence to buy US goods until August 19.
The Philadelphia Semiconductor Index gained 1.61 per cent and was on track to end a three-day slump. Companies that have been supplying to Huawei including Intel Corp, Qualcomm Inc, Xilinx Inc and Broadcom Inc rose between 1 per cent and 2 per cent.
The broader S&P 500 technology sector rose 1.08 per cent, the most among the 11 major S&P sectors trading higher.
“The easing up on Huawei is being seen as a sign that while the United States and China are unhappy with each other, neither side wants to burn the negotiation bridge at the moment,” said Connor Campbell analyst at Spreadex in London.
President Donald Trump added Huawei to a trade blacklist last week, leading several companies to suspend business with the world’s largest telecom equipment maker and triggering fears that the decision could deeply impact the global technology sector.
Reuters reported on Sunday that Alphabet Inc’s Google would stop providing Huawei access to its proprietary apps and services. But Huawei said on Tuesday it is working closely with the US company to resolve the restrictions.
Wall Street has been impacted by mounting concerns about a prolonged trade war, with the S&P 500 set to post its worst monthly decline since the December sell-off. The benchmark index is trading nearly 4 per cent below its all-time high hit earlier in May.
“This is pure case of cautiousness and we’re stuck in a trading range. The recent behavior is of indecisiveness,” Peter Cardillo, chief market economist at Spartan Capital Securities in New York, said.
At 8.31am ET, Dow e-minis were up 138 points, or 0.54 per cent. S&P 500 e-minis were up 14 points, or 0.49 per cent and Nasdaq 100 e-minis were up 46 points, or 0.62 per cent.
Investors also focused on earnings reports from a handful of retailers.
Home Depot Inc shares dipped 0.5 per cent after the home improvement chain reported its slowest growth in quarterly same-store sales in at least three years. Rival Lowe’s Cos Inc fell 1 per cent.
Department store operator J.C. Penney Co Inc fell 7.8 per cent after the company reported a bigger-than-expected fall in quarterly comparable-store sales.
Rival Kohl’s Corp tumbled 8.8 per cent after the company cut its full-year profit forecast and reported quarterly same-store sales and profit that missed expectations.
Department store operator Nordstrom Inc dropped 1.3 per cent. The company is expected to report results after markets close on Tuesday.
On a thin day for economic data, the National Association of Realtors is expected to show US existing home sales rose to a seasonally adjusted annual rate of 5.35 million in April from 5.21 million in March. The report is due at 10am ET.