Earlier this week, China rocked world markets when it said it would impose tariffs on a small number of imports from the USA but this time the reaction in Asia appeared more measured.
"We're starting to feel that while markets hate uncertainty, Trump's bark is worse than his bite when it comes to trade", said Robert Phipps, a director at Per Stirling Capital Management in Austin, Texas.
The S&P 500 climbed 1.2% to 2644.69 and the Nasdaq Composite gained 1.45% to 7042.11.
USA stocks rallied in afternoon trading, reaching positive territory after plummeting earlier amid reports that China is planning to retaliate against the United States in an escalating trade conflict that has investors around the world on edge.
USA equities slumped on Monday, the first trading day in April, as worries about trade issues and a sharp decline in the technology sector weighed on the market.
Volume on USA exchanges was 7.04 billion shares, compared with the 7.3 billion average for the last 20 trading days.More news: Congresswoman Elizabeth Esty won't seek re-election after handling of abuse case
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Tesla Inc. shares (TSLA) gained 7.3% in its biggest one-day gain in about a year.
Technology stocks and retailers, which bore the brunt of the selling a day earlier, posted solid gains in early trading Tuesday. The stock opened with a bang Tuesday, but closed on a down note (http://www.marketwatch.com/story/spotifys-stock-opens-with-a-bang-then-pulls-back-2018-04-03). Viacom shares rose 3.9%. It was the best day for the stock since May 2010.
Which economic reports are in focus?
Reports on private sector employment, factory orders, service sector activity and worldwide trade may also attract attention in the coming days. The news is a positive read on the labor market ahead of Friday's closely watched government data on nonfarm payrolls. It wouldn't shock me if we chopped around sideways for a little bit before earnings season.
Amazon's stock price was down 5.2 percent after President Donald Trump, who has repeatedly assailed the online retail giant over what he says is its abuse of the Postal Service and failure to pay adequate taxes, took another swipe at the company on Twitter.
What are other markets doing?
China suspended tariff concessions on 128 items of USA products including pork and fruits starting Monday, according to the Ministry of Finance.