Stocks rise after Chinese President Xi Jinping vows to lower barriers
NEW YORK - Stocks rose smartly on Tuesday after Chinese President Xi Jinping pledged in a speech to lower trade barriers in China and enforce policies to protect intellectual property, key sticking points for the Trump administration.
"China's door of opening up will not be closed and will only open wider," Xi said at the Boao Forum for Asia on the southern island of Hainan.
Xi said Beijing will "significantly lower" tariffs on auto imports this year and ease restrictions on foreign ownership in the auto industry "as soon as possible."
In a tweet, President Trump expressed thanks for Xi's "kind words on tarrifs (sic)" and "enlightenment on intellectual property and technology transfers."
The Dow Jones industrials ended up 429 points, or 1.8 percent, to 24,408, while the S&P 500 and Nasdaq also rose by 1.7 percent and 2.1 percent, respectively. Wall Street avoided Monday's fate, when stocks had been on track for a similarly big jump before a late slump wiped out most of their gains. The Dow had risen as much as 440 points during the day, but it finished just 46 points higher.
Chinese markets also rallied on Tuesday, with the Shanghai Composite rising 1.7 percent and the tech-heavy Shenzhen up 1 percent. European markets climbed as well on Xi's conciliatory remarks.
Lower tariffs could mean better sales for U.S. car companies, while banks could also gain entry into the Chinese market. That sent automakers and financial companies higher.
GM (GM), which sold 4 million vehicles in China last year, rose 3.3 percent, while Fiat Chrysler (FCAU) ended up 2 percent and Ford (F) climbed 1.8 percent. Aircraft maker Boeing (BA), which counts China as its largest market, jumped 3.8 percent.
Energy companies rose along with the price of oil, a sign investors are getting more confident that the trade tensions won't have a big effect on the global economy. Technology and industrial companies also rose.
President Trump has threatened to raise tariffs on Chinese goods worth $50 billion in response to complaints Beijing pressures foreign companies to hand over technology in violation of its World Trade Organization market-opening commitments. Beijing fired back with its own $50 billion list of U.S. goods for possible retaliation.
"President Xi's speech could create a very good platform to launch US-China dialogue at the WTO to find a deal on intellectual property rights that will address US concerns. If a US-China deal can be struck on intellectual property rights at the WTO, this could pave the way for the US withdrawing its proposed Section 301 tariff measures on China, allowing China to also withdraw its retaliatory tariff countermeasures," Rajiv Biswas, Asia-Pacific chief economist at IHS Markit, said in a note.
Although investors were cheered by Xi's speech, he stopped short of offering specifics or timing for the reforms, leading some to say finding a solution to the trade dispute may be easier said than done.
"This would potentially serve to appear to address U.S. criticisms, and while it may re-instill a degree of confidence in the market, we expect that it will not be nearly enough to placate the U.S. administration," said TD Securities analyst Sacha Tihanyi in a research note.
Other analysts also predicted that Xi's comments are unlikely to end the trade fight with the U.S.
"Xi's speech today underdelivers after all the hype from Beijing," analysts with Eurasia Group, a political risk research firm, told clients. "Xi proposed actions which were previously promised, and none address the reciprocity issues in US-China relations. We assess that nothing in the speech will deter the U.S. from moving forward with tariffs.
Markets are also keeping an eye on Capitol Hill today, where Facebook (FB) CEO Mark Zuckerberg is testifying about the Cambridge Analytica data scandal. Facebook shares climbed as Zuckerberg spoke, ending the day up 4.5 percent.
-- CBS News' Jillian Harding contributed to this report
