Once again, Wall Street's jitters over the escalating trade dispute between the U.S. and China proved to be short-lived.
U.S. stocks moved solidly higher Tuesday as investors largely brushed off the Trump administration's decision to impose tariffs on an additional $200 billion of Chinese goods starting next Monday.
A swift response by China, saying it will increase tariffs on $60 billion worth of U.S. goods, also didn't dampen investors' buying mood.
"The tariffs, they kind of came in as expected, but there's been this ongoing hope that this eventually will get resolved," said Erik Davidson, chief investment officer for Wells Fargo Private Bank.
Gains in technology stocks and consumer-focused companies powered Tuesday's broad rally, which set the market on course to reverse much of its losses from a day earlier.
Bond yields climbed, sending banks higher. Energy stocks also rose along with crude oil prices.
The S&P 500 index rose 18 points, or 0.6 percent, to 2,907 as of 3:40 p.m. Eastern Time. The Dow Jones Industrial Average climbed 211 points, or 0.8 percent, to 26,273. The Nasdaq composite gained 69 points, or 0.9 percent, to 7,965. The Russell 2000 index of smaller companies added 11 points, or 0.7 percent, to 1,714.
The Trump administration announced late Monday that it will impose tariffs on an additional $200 billion of Chinese goods starting next Monday, potentially raising prices on goods ranging from handbags to bicycle tires. The tariffs will start at 10 percent and then climb to 25 percent on Jan. 1.
China responded by saying it will increase tariffs on $60 billion worth of U.S. goods. The move involves increases of 10 percent and 5 percent on 5,207 types of U.S. goods. A list released last month included coffee, honey and industrial chemicals.
Trump has threatened to add another $267 billion in Chinese imports to the target list in response to any retaliation by China. That would raise the total to $517 billion, covering nearly everything China sells in the United States.
Even so, there were no signs of the jitters that caused a sell-off on Monday, snapping a five-day winning streak for the S&P 500.
Technology stocks rebounded after leading the market sell-off on Monday. Micron Technology climbed 4.1 percent to $45.37.
Apple, which received an exemption to the new tariffs on goods imported from China, gained 0.4 percent to $218.82. Fitbit also benefited from some of components that the company uses to manufacture its fitness monitoring bands not being among the items subject to the new tariffs. The stock jumped 7.3 percent to $5.85.
Gains by retailers, travel sites and other consumer-focused companies helped lift the market. L Brands led the pack, picking up 4.6 percent to $29.74.
Union Pacific climbed 4.6 percent to $163.925 after the railroad operator announced a plan to improve its profitability.
Shares in Nexeo Solutions surged 14.8 percent to $11.49 after it agreed to be acquired by specialty chemicals maker Univar in a deal the companies valued at $2 billion.
Tesla slid 3.4 percent to $284.81 after Bloomberg reported that the electric car maker is being investigated by the Justice Department over public statements made by CEO Elon Musk. Early last month Musk tweeted that he had secured funding to take the company private. A couple of weeks later, he put out a statement saying the go-private deal was off.
General Mills slumped 7.1 percent to $44.38 after the cereal maker reported quarterly sales that fell short of analysts' estimates.
FedEx dropped 4.9 percent to $243.31 after the package delivery giant reported quarterly earnings that fell short of Wall Street's forecasts.
Oil prices climbed ahead of an upcoming OPEC meeting where members will weigh how to address the loss of supply from Iran, which faces U.S. sanctions. Benchmark U.S. crude rose 1.4 percent to settle at $69.85 a barrel in New York. Brent crude, used to price international oils, gained 1.3 percent to close at $79.03 a barrel in London.
In other energy trading, heating oil climbed 1.3 percent to $2.24 a gallon, wholesale gasoline picked up 1.4 percent to $2 a gallon and natural gas jumped 4.2 percent to $2.93 per 1,000 cubic feet.
The pickup in oil prices helped send energy stocks higher. Marathon Oil climbed 3 percent to $21.49.
Bond prices fell. The yield on the 10-year Treasury rose to 3.04 percent from 3 percent late Monday. That's the highest level since May 22, when the yield was 2.06 percent.
The dollar rose to 112.37 yen from 111.18 yen on Monday. The euro weakened to $1.1667 from $1.1686.
Gold slipped 0.2 percent to $1,202.90 an ounce. Silver lost 0.3 percent to $14.19 an ounce. Copper surged 3 percent to $2.73 a pound.
In Europe, the DAX in Germany rose 0.5 percent, while France's CAC 40 added 0.3 percent. Britain's FTSE 100 was flat. Japan's Nikkei 225 jumped 1.4 percent, while the Kospi in South Korea added 0.3 percent. Hong Kong's Hang Seng index gained 0.6 percent.