US stocks bounce after yesterday’s steep declines

Major US equity indices opened slightly higher on Tuesday and attempted a modest recovery following a trade-driven selloff in the previous session.  

Prospect of a full-blown US-China trade war spooked global investors and triggered a strong wave of risk-aversion trade on Monday. The broader S&P 500 Index recorded its steepest one-day decline since early April and the blue-chip Dow Jones Industrial Average closed below the closely watched 200-day long-term moving average  for the first time since June 2016.

Meanwhile, conflicting signals from the Trump administration over proposed restrictions on foreign investment in US tech companies took a significant toll on a number of technology stocks, with tech-heavy Nasdaq Composite Index shedding over 2% to register its biggest one-day percentage loss since April 6.

After initial reports on Monday that only Chinese investments would come under check, the US Treasury Secretary Steven Mnuchin said on Twitter that restrictions would apply “to all countries that are trying to steal our technology”, not just China. However, White House trade and manufacturing adviser Peter Navarro, speaking to on CNBC, said that a forthcoming Treasury Department report will focus on China, and with respect to other countries, there is “nothing on the table.”

It would now be interesting to see if the up-move is sustainable or gets sold into as investors might now turn reluctant to re-enter the market amid fears of a spiralling trade dispute between the US and other major economies.