Stocks rose on Wednesday in a roller-coaster trading session during which investors were whipsawed by updates on an escalating trade dispute between the United States and China.
The Standard & Poor’s 500-stock index finished up 1.2 percent, an upbeat end to a session that started with a steep, nearly 1.5 percent decline driven by jitters of worsening trade tensions between the world’s two largest economies.
Stocks reversed course after Larry Kudlow, President Trump’s newly installed director of the National Economic Council, sought to play down the risks of an outright trade war in late-morning comments to reporters.
Washington and Beijing have announced a series of tariffs and counter-tarrifs in recent days, with China saying on Wednesday that it planned to impose some $50 billion in import duties on soybeans, cars, chemicals and other goods from the United States.
The moves came in response to Mr. Trump’s recent decision to place tariffs on steel, aluminum, aircraft parts, flat-screen televisions and other products from China, which he has long accused of engaging in unfair trade practices.
Investors initially seemed willing to discount the possibility of a trade war, perhaps in the belief that the Trump administration’s protectionist talk would fade amid negotiations through traditional channels. But the tit-for-tat tariffs rolled out by the United States and China may be stripping away some of that confidence.
“The scale and speed of Mr. Trump’s actions would have been difficult to predict at the start of the year,” analysts at Deutsche Bank said in a note to clients on Wednesday before American markets opened. “The growth outlook is more uncertain than it was.”
The latest volley between the United States and China has mostly involved advanced manufacturing technologies, a dispute that parallels the countries’ fight over steel and aluminum. The overall value of the duties at issue is small given that total trade between the two countries amounts to around $650 billion a year. But economists and investors say the tensions could ratchet up quickly, and that the tariffs could become more punishing.
The growing tensions have helped erode many of the stock market gains that Mr. Trump had touted since taking office. The Dow Jones industrial average has recently slipped to its lowest level of the year in recent days, despite generally positive economic growth around the world and tax legislation in the United States that has helped bolster corporate profits.
The trade dispute also reverberated in commodities markets Wednesday. Cotton prices fell 2.9 percent, and soybean prices dropped 2.2 percent. Corn prices declined by 1.9 percent.
Analysts at Goldman Sachs said China’s imposition of tariffs on soybeans, an agricultural staple in Midwestern swing states, was a sign of worsening friction between Washington and Beijing.
“We view the inclusion of soybeans in today’s announcement as political in nature and reflective of the escalation of the trade dispute with the United States,” Goldman Sachs commodities analysts said in a note to clients.
Despite the volatility in stock trading, there was little sign of a rush to the safety of United States Treasury bonds. Instead of falling sharply — a signal of a panicky market — yields on 10-year Treasury notes were largely stable, finishing the day at 2.78 percent.