US Stocks Jump on Tech Surge, China Retaliates to Tariffs

Market Overview

* US stocks closed higher on Tuesday, led by technology companies, as investors monitored China's immediate response to President Donald Trump's increased tariffs and the potential risks of a trade conflict.
* The Dow Jones Industrial Average gained 0.3%, the S&P 500 rose 0.7%, and the Nasdaq Composite surged 1.4% to recover from Monday's decline.

China's Response and Tariff Tensions

* China retaliated swiftly to Trump's additional 10% levies on Chinese imports, which took effect at midnight.
* China imposed tariffs of 15% on US coal and liquified natural gas, 10% on crude oil, farm equipment, and some autos, starting February 10th.
* The tit-for-tat measures increase the risk of a trade war that could damage both economies.
* However, some Wall Street analysts view China's response as showing restraint, opening the door for compromise as seen in previous tariff postponement deals with Mexico and Canada.
* Trump brought forward talks with Chinese President Xi Jinping, indicating they would take place "probably over the next 24 hours" instead of later in the week.

Technology Sector

* Tech stocks led the market surge, with Alphabet's Google gaining 2.5%, Amazon up 1.3%, and Microsoft rising 1.2%.
* Nvidia climbed 2% in early trading.

Palantir's Earnings Boom

* Palantir soared 25% to a record high after reporting better-than-expected revenue forecasts.
* Investors were impressed by solid demand for its AI products, particularly in US commercial and government sectors.

Labor Market Data

* Job openings declined more than anticipated in December, falling to 7.6 million, the lowest level since September.
* However, economists said the details align with the "broadly stable" labor market described by Federal Reserve Chair Jerome Powell.
* The ratio of job openings to unemployed workers remains around 1 to 1, indicating a balanced labor market.

Earnings Season Highlights

* Spotify jumped 9% before the bell following strong quarterly results and its first full-year profit.
* Google is set to report its earnings after the bell, with investors eyeing the performance of its AI initiatives.
* PepsiCo shares fell 2.5% in pre-market trading after its earnings report raised concerns about top and bottom-line pressures.

China's Investigation of American Companies

* China launched an antitrust investigation into Google and added PVH Corp and Illumina to its "unreliable entity list."
* The move coincides with the US implementing new tariffs on Chinese goods, further escalating trade tensions.