US Stocks Rebound Amid China-US Tariff Tensions and Job Market Data

On Tuesday, US stocks witnessed a rise as investors evaluated China's immediate response to President Donald Trump's additional tariffs. The risk of a potential trade war between the US and China had raised concerns. Investors also took note of fresh data on job openings, which showed an unexpected decline in December.

The Dow Jones Industrial Average (^DJI) traded above the flatline, while the benchmark S&P 500 (^GSPC) ascended by approximately 0.5%. The tech-heavy Nasdaq Composite (^IXIC) rallied by over 0.1% after a day of losses.

China's Retaliatory Measures

Beijing responded swiftly to President Trump's additional 10% tariffs on Chinese imports, which took effect at midnight on Tuesday. China imposed 15% tariffs on US coal and liquefied natural gas, effective February 10, as well as 10% duties on crude oil, farm equipment, and select automobiles. These retaliatory measures heighten the risk of an escalating trade war that could harm both of the world's top two economies. However, some on Wall Street view the Chinese response as a sign of restraint, leaving the door open for compromise, as seen in the US tariff postponement deals with Mexico and Canada.

Optimism and Market Movements

Adding to the optimism, President Trump accelerated talks with Chinese President Xi Jinping. On Monday, he stated that discussions would occur "probably over the next 24 hours" instead of later in the week. The US dollar index (DX-Y.NYB) edged down by around 0.8% as concerns eased somewhat.

Meanwhile, China opened an antitrust investigation into Alphabet's (GOOG, GOOGL) Google and added Calvin Klein owner PVH (PVH) and biotech company Illumina (ILMN) to its "unreliable entities list." Google's shares surged by about 2% in early trading, as investors anticipate the tech giant's fourth quarter results, due after market close. Focus is on gaining insights into Google's efforts to monetize its massive AI investments and its response to Chinese startup DeepSeek's more cost-effective AI models.

Job Openings and Labor Market

Job openings dipped more than anticipated in December, raising concerns about a cooling labor market. The Bureau of Labor Statistics reported 7.6 million job openings at the end of December, down from 8.15 million in November. Economists had forecasted 8 million openings in November. The Job Openings and Labor Turnover Survey (JOLTS) also indicated 5.46 million hires during the month, a decline from 5.37 million in November. The hiring rate remained unchanged at 3.4% for the third consecutive month. Additionally, the quits rate, an indicator of worker confidence, stood at 2% in December, holding steady from the previous month.

Additional Market News

Spotify shares climbed over 9% pre-market on positive quarterly results. The stock has gained approximately 150% over the past year. Palantir shares soared by 18% pre-market, following strong earnings that exceeded analysts' estimates.