Stocks Rally, Shrugging Off Latest Round Of Tariffs

Stocks rallied yesterday as traders took the announcement of new tariffs on China, and vice versa, in stride.

To recap: on Monday, the U.S. said it will levy a 10% tariff on $200 billion of Chinese goods. And that will rise to 25% at the end of the year if there's no deal by then. The WH is also considering whether to put tariffs on an additional $250 billion of Chinese goods.

In retaliation, China yesterday, said it will impose tariffs of between 5-10% on an additional $60 billion of U.S. goods.

While the headlines scream trade war, let's not forget that this is all happening against a backdrop of continued negotiations. In fact, the U.S. and China just last week, already agreed to resume trade talks. Clearly, the tit for tat tariffs with deadlines for escalation is meant to keep the talks moving with ample incentive to make a deal.

And given the market's bullish response to this news, it's clear that the implementation of the latest round of tariffs, on both sides, is less severe than feared.

Stocks continue to trade within striking distance of making new all-time highs.

They got a little closer to that mark yesterday. Let's hope we get another step closer today.

And I wouldn't be at all surprised if we breakout to new highs by week's end.

See you tomorrow,

Kevin Matras

Executive Vice President, Zacks Investment Research

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