The trade dispute between the U.S. and China escalated Friday, but Wall Street focused on a solid jobs report instead.
After a wobbly start, U.S. stocks mounted a broad rally, shaking off two consecutive weekly losses.
The S&P 500 index rose 23.21 points, or 0.8 percent, to 2,759.82. The Dow Jones industrial average gained 99.74 points, or 0.4 percent, to 24,456.48. The Nasdaq composite added 101.96 points, or 1.3 percent, to 7,688.39. The Russell 2000 index of smaller-company stocks picked up 14.57 points, or 0.9 percent, to 1,694.05.
Mounting jitters in recent weeks over a stepped-up trading dispute between the world's two largest economies had weighed on the markets well ahead of Friday, when Beijing and Washington launched dueling tariffs on billions in goods.
The U.S. put a 25 percent tax on $34 billion worth of Chinese imports Friday. China retaliated with taxes on an equal amount of U.S. products, calling the move the start of the "biggest trade war in economic history."
"The markets had already sold off the prior two weeks," said Dan Heckman, national investment consultant at U.S. Bank Wealth Management. "The market probably had built that expectation in already and today we're seeing a nice rebound."
A solid pickup in hiring by U.S. employers last month also helped keep investors in a buying mood.
Though the first exchange of tariffs is unlikely to inflict much economic harm on either nation, the damage could soon escalate. President Donald Trump, who has claimed that winning a trade war would be easy, has said that he's prepared to drastically raise tariffs on more Chinese imports. Mounting tariffs could raise costs across the board for consumers and businesses, slowing growth and investment and hurting companies that rely on imported parts to make their goods.
Despite the market's gains Friday, much damage has already been inflicted on stocks that would stand to lose in a protracted trade battle with China. American companies that do a lot of business there have seen steep drops in their stock prices in the past few weeks.
Aircraft maker Boeing, which relies on China for 12.3 percent of its sales, according to FactSet, has seen its stock fall 9.9 percent over the past month as the trade tensions with China worsened.
Heavy equipment maker Caterpillar, for whom China is also its second-biggest market after the U.S., is off 13.5 percent over the same time. Liquor maker Brown-Forman, whose products include Jack Daniels, is off 15 percent since late May. Whiskey, along with soybeans, pork and cheese, is among the products China is imposing retaliatory tariffs on.
"The market is counting on this to subside," said Erik Davidson, chief investment officer at Wells Fargo Private Bank. "If they get an indication that this will continue to escalate, that will cause some problems."
Investors also welcomed new data Friday from the government showing that U.S. employers kept up a brisk pace of hiring last month, without having to increase wages much. Markets have been watching to see if tight labor market conditions would force wages higher, a sign of inflation.
The Labor Department said that U.S. employers added 213,000 jobs in June. Average hourly pay rose just 2.7 percent from a year earlier, which means that after adjusting for inflation wages remain nearly flat.
Health care stocks posted the biggest gains, led by Biogen. The drugmaker's stock soared 19.6 percent to $357.48 on encouraging results from an Alzheimer's therapy.
Business on 07/07/2018