Wall Street wobbles as trade tensions flare again with China

NEW YORK (AP) — Stocks faltered on Wall Street Tuesday as trade tensions escalated again with China.

The S&P 500 rose 0.2% in afternoon trading. The index fell as much as 1.5% earlier in the day, with big tech stocks with outsized values ​​offsetting gains elsewhere. The technology sector remains a heavyweight holding back broader market gains.

The Dow Jones Industrial Average rose 309 points, or 0.7%, as of 1:05 p.m. Eastern Time. The Nasdaq Composite Index slipped 0.2%.

The sharp swings from morning to afternoon mark another sharp turn for markets in recent days. Wall Street fell Friday for its worst day since April and rebounded Monday for its best day since May. These fluctuations were caused by a change in trade sentiment between the United States and China.

Latest drop follows Chinese Ministry of Commerce prohibit relationships by Chinese companies owning five subsidiaries of South Korean shipbuilder Hanwha Ocean, lambasting President Donald Trump’s efforts to rebuild the industry in America. European markets were mixed and Asian markets fell.

Tech stocks are particularly sensitive to trade issues involving China. Large chipmakers and other companies rely on China for raw materials and manufacturing. China’s large consumer base is also important for sales growth. Chipmaker Nvidia fell 2.6%.

The ongoing trade war between the United States and the world has exerted an unpredictable weight on the market. The trade conflict between the United States and China is potentially the most economically consequential, due to the position of these two countries as the two largest economies in the world.

International shipping and shipbuilding have become a major source of friction between Washington and Beijing, with each side imposing new shipping costs on each other’s ships. These fees took effect Tuesday.

“We remain cautiously optimistic that both sides will ultimately reach a negotiated solution, given the high economic stakes,” said Ulrike Hoffmann-Burchardi, chief investment officer for the Americas and global head of equities at UBS Global Wealth Management.

THE American economy has so far avoided any major impact from frequently changing U.S. tariff policies. That could change if countries fall back into a cycle of tariff retaliation and companies pass on more of the higher costs to consumers.

United States government shutdown ended the usual economic updates on inflation, consumer spending and employment. This makes it more difficult for investors and economists to continue to assess the economic impact of tariffs. Wall Street looks to the latest company earnings and forecasts to get a better idea of ​​the overall economic picture.

Upcoming earnings reports will also help Wall Street assess the value of the broader market, amid criticism that it has become too expensive after prices rose much faster than corporate profits. For stocks to appear cheaper overall, either prices must fall or company profits must increase.

Banks were the first major sector to launch the latest round of earnings reports, and the results point to Wall Street having one of its most profitable quarters ever. Still, executives at major banks have expressed varying degrees of caution about markets and the economy. JPMorgan Chase slipped 1.3%, Wells Fargo rose 7.6% and Citigroup rose 4.3%.

Healthcare giant Johnson & Johnson fell 1.1% after announcing it would spin off its orthopedics business into a standalone company.

The lack of information about the U.S. economy has also deprived the Federal Reserve of much of the information it uses to make policy decisions. The central bank cut its benchmark interest rate by a quarter of a percentage point in September, fearing worsening unemployment. This is the first cut of the year and Wall Street expects similar cuts at the October and December Fed meetings.

Gaps in employment and inflation data make it harder for the central bank to balance its tasks of maintaining strong employment while maintaining price stability. Tuesday, Fed Chairman Jérôme Powell again reported that the Fed is slightly more worried about the labor market.

“Increasing employment risks have changed our assessment of the balance of risks,” he said at a meeting of the National Association of Business Economics in Philadelphia.

Treasury yields have remained relatively stable. The 10-year Treasury yield fell to 4.03% from 4.05% Friday evening. Bond markets were closed in the United States on Monday for the holiday.

Gold edged up 0.6% and remains above $4,100 an ounce. The precious metal has soared 57% in 2025 amid a long list of uncertainties, including tariffs and the economy.

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AP writers Yuri Kageyama, Matt Ott and Christopher Rugaber contributed to this report.