Dow gains when the stock market struggles to scratch back from Monday's big losses

  • St. Louis Fed & # 39; s said to have a rate hike more "pegged in" for 2019
  • China fixes yuan at a stronger level than Wall Street feared, at 6.9683 yuan
  • Late Monday, the US Treasury Department labeled a currency manipulator [19659004] US stocks in the middle of Tuesday were beyond their best level of the session, and Dow fell short as investors digested recent developments in an intensifying trade boom.

    Investors frightened on Monday when the Chinese yuan fell to the lowest level in a decade after President Trump's threat last Thursday to impose 10% tariffs on a further $ 300 billion of imported Chinese goods, effective September 1[ads1].

    How do benchmarks perform?

    Dow Jones Industrial Average

    DJIA, + 1.09%

    rose 124 points, or 0.5%, to 25,840, but from the intraday high to 25,946.74, the S&P 500 index

    SPX, + 1.23%

    climbed 15 points, or 0.5%, at 2,889, weighted by 0.8% in the energy sector

    XLE, -0.32%

    and materials

    XLB, -0.10% ,

    while the Nasdaq Composite Index

    COMP, + 1.42%

    advanced 55 points, or 0.7%, on 7,780, beyond its intrasession peak of 7,835.42.

    Monday had its worst day of the year, with Dow shedding more than 767 points. Dow ended the day at 2.9%, at 25,717.74, while the S&P 500 went down 87.31 points, or 3%, to finish at 2,844.74. The Nasdaq Composite threw 278.03 points to end at 7 726.04, a 3.5% decline.

    What is driving the market?

    Traders were encouraged by China's central bank, which moved in Asian trading hours to put, or fix, its midpoint reference stronger than expected early Tuesday, at 6,9683 yuan. A breach of the $ 7 dollar on Monday, interpreted by some as a deliberate depreciation of the currency, helped fuel global sales and fall in bond yields.

    "A more market-friendly China solution gave the first signal that [People’s Bank of China] has a new idea of ​​arming the yuan," said Stephen Innes of the World Cup Markets in Singapore. "However, the solution is ambiguous enough to keep two-sided interest alive while still conveying a message to US trade hawks that under no uncertain terms, China will be a pushover if trade talks ever resume."

    Read: Why a falling Chinese yuan shattered the stock market and intensified the trade war

    China's overnight move to curb the fall in its currency came despite the decision late Monday by the US Treasury to label China a currency manipulator for the first time since 1994 opened the door for new sanctions and ramp up already high trade tensions to a possible currency war.

    China's yuan on Tuesday traded at $ 7.0695 for dollars in offshore trade

    USDCNH, -0.6114% .

    In mainland trade

    USDCNY, -0.3446% ,

    The yuan was trading at more than 7.0316 per dollar, holding around its lowest level in about ten years. People's Bank of China allows the yuan currency on land to trade in a band within 2% of the mid-point against the dollar.

    "As we pull the yuan higher, it is not only looking to deal with any decline, but also appears to contain damages in terms of confidence in their management of the Chinese currency and economy," wrote Michael Hewson, chief market analyst at CMC Markets UK, in a daily research note.

    However, there is still doubt about the durability of the more optimistic complexion on Tuesday's trade.

    "This move from China may have given investors a brief respite after several days of sales, but it remains to be seen whether today's move is symbolic of a short-term base, or just the precursor of a dead cat.", Hewson wrote. [19659005] In a CNBC interview Tuesday morning, White House chief Larry Kudlow said Trump will still have a trade deal, and the United States is planning to host Chinese dealers in September, but China must make concessions. in the trade dispute with China because "the US economy is very strong, theirs is not."

    In economic news, job vacancies fell slightly to 7.35 million in June, according to US Labor Dept.'s JOLTS report Tuesday morning.

    St. Louis Federal Reserve President James Bullard said he has an "enhanced" interest rate hike for 2019 and spoke at the National Economic Club in Washington.

    Before the statement, Bullard told Tuesday in a separate Agen ce France Press in an interview that the Fed "cannot realistically move monetary policy into a tat-for-tat trade war." Bullard is a member of the interest-rate federal Open Market Committee.

    Read : Former Fed executives sue for independence

    Which stocks are in focus?

    SeaWorld Entertainment Inc .

    SEAS, -1.88%

    on Tuesday reported a second-quarter surplus that beat expectations, even though revenue fell short, while revenue per guest exceeded analyst projections. Shares of SeaWorld increased by 4.1%.

    Icahn Enterprises L.P .

    IEP, + 1.64% ,

    activist investor Carl Icahn & # 39; s company reported $ 2.19 billion in sales in the second quarter on Tuesday, down from $ 3.42 billion in revenue the year before. Shares received 1.1%.

    Shares of Regeneron Pharmaceuticals In ca.

    REGN, + 0.52%

    rose 0.7% after the company reported revenue in the second quarter that beat analysts' expectations.

    Shares of Dean Foods Co. .

    DF, -31.72%

    plunged 28% after the milk and dairy products seller reported a larger loss than expected loss in the second quarter and sales that rose less than analyst attributions, amid volume pressure and an "accelerated decline" "in the conventional white milk category.

    What other assets are in focus?

    US 10-year return on equity

    TMUBMUSD10Y, + 1.42%

    traded up 1.742% early Tuesday after hitting 1.738% late Monday, marking its lowest on October 7, 2016, according to Dow Jones Market Data.

    Read: Interest rate cut in September 'fully priced', with Trump tariff tweets seen pushing the Fed to take more steps

    Gold for delivery in December

    GCZ19, + 0.35%

    on Comex edged lower, less than 0.1%, after settling at $ 1,476.50 per ounce, expanding to the highest level since 2013 , according to FactSet data.

    U.S .. oil futures

    CLU19, -2.01%

    climbed modestly higher to $ 54.88 per barrel.

    Overnight Thursday, Asian and European stocks had followed US stocks lower. Japan's Nikkei 225 Index

    NIK, -0.65%

    falls 0.7%, Hong Kong's Hang Seng Index

    HSI, -0.67%

    HSI, -0.67%

    fell 0.7% while the CS1 300 index

    000300, -1.07%

    falls 1.1% . The Pan-European Stoxx 600

    SXXP, -0.47%

    led 0.6% higher.

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