Dow rises 100 points after report that US and China are said to restart talks to avoid trade war

    Stocks opened higher on Tuesday after a report said the U.S. and China are seeking talks to defuse an escalating trade conflict between the two countries.

    The Dow Jones Industrial Average rose 110 points, with 3M, Caterpillar and Boeing as the best-performing stocks in the index. The S&P 500 gained 0.3 percent as industrials rose nearly 2 percent. The Nasdaq Composite advanced 0.2 percent.

    Bloomberg News reported that the world’s largest economies are trying to restart talks in order to avoid a full -blown trade war. The report, which cites two people familiar with the situation, said Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He are talking privately about the matter. Mnuchin told CNBC last week “there continue to be some quiet conversations” regarding China.

    “It’s just an agreement to have talks. We don ‘t know where the talks go or whether they will be fruitful. They seem to be resuming high level talks. We’ll have to see what comes of it,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.

    The report came a few minutes before the U.S. market open at 9:30 a.m. ET and it sent stock futures higher. Shares of big exporters Boeing and Caterpillar jumped more than 1.5 percent on the report. Deere’s stock also gained more than 4 percent.

    Both the S&P 500 and Nasdaq came into Tuesday’s session with three-day losing streaks as they were pressured by a steep decline in tech.

    Tech has lost 5.4 percent over the past three sessions after mixed results from some of the largest companies in the sector. Last week, Facebook reported weaker-than-expected revenue and disappointing global daily active users, a key metric for the company. Twitter, meanwhile, posted fewer-than-expected monthly users for the previous quarter.

    “Facebook is the poster child for the recent Tech stock decline,” said Nicholas Colas, co-founder of DataTrek Research, in a note. “While its competitive advantage remains robust, expected returns on capital are lower than before last week’s earnings release (higher costs to fix the platform) and growth rates for capital deployed are also suspect.”

    These results have led some investors to lose faith in the so-called FANG trade, which is responsible for the lion’s share of the S&P 500’s gains this year.

    The corporate earnings season continued on Tuesday with Dow-components Procter & Gamble and Pfizer reporting better-than-expected earnings. Shares of Procter were flat, while Pfizer’s stock gained half a percent.

    Apple, another Dow component, is scheduled to report Tuesday after the close.

    About 60 percent of the S&P 500 has released its quarterly results, with 82 percent of those companies posting better-than-expected earnings, according to Thomson Reuters I/B/E/S.

    “Do you remember all the pundits who warned 1Q 2018 earnings were at their peak? Well, the 2Q 2018 numbers for these 299 S&P 500 companies that have reported are better than how they reported last quarter in terms of year-over-year sales and earnings growth. There are also more companies beating estimates this quarter as well,” Nick Raich, CEO of The Earnings Scout, wrote in a note.

    The Federal Reserve started a two-day monetary policy meeting on Tuesday, with an announcement scheduled for Wednesday. Investors are not expecting a rise in interest rates, however, but discussion on trade or where the Federal Reserve is thinking of heading could be talked about.

    The meeting follows the publication of much economic data and the news that President Donald Trump was “not thrilled” about rising interest rates, expressing concern that the Fed could upset the economic recovery.

    —CNBC’s Patti Domm contributed to this report.

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