Wall Street bounces back as yuan stabilizes

U.S. stocks jumped more than one percent on Tuesday, bouncing back from a sharp plunge the previous day as Chinese yuan stabilizes at a stronger rate than the market expectations, easing investors' concerns that currencies would be the next weapon in the U.S.-China trade war.

The gains of Wall Street came after U.S. stocks' biggest percentage drop of the year and yuan slid to its lowest of 7.0240 per dollar in more than a decade on Monday. 

The central parity rate of yuan weakened 458 pips to 6.9683 against the U.S. dollar on Tuesday morning according to the China Foreign Exchange Trade System, which was stronger than the 6.9736 that had been expected, Reuters said.

The higher central parity rate on Tuesday and White House economic adviser Larry Kudlow's comment that U.S. President Donald Trump was planning to host a Chinese delegation for talks in September allayed fears of a further escalation in the trade war.

Traders work after the opening bell at the New York Stock Exchange (NYSE). /VCG Photo

Traders work after the opening bell at the New York Stock Exchange (NYSE). /VCG Photo

The S&P technology index SPLRCT, which includes companies that have significant exposure to China and were at the heart of Monday's sell-off, provided the biggest boost to the S&P index, rising 1.61 percent.

The Dow Jones Industrial Average rose 311.78 points, or 1.21 percent, to 26,029.52, the S&P 500 gained 37.03 points, or 1.30 percent, to 2,881.77 and the Nasdaq Composite added 107.23 points, or 1.39 percent, to 7,833.27.

The S&P 500 and Nasdaq each snapped a six-day losing streak. Stocks had been reeling from last week's shock when Trump vowed to slap a 10 percent tariff on a further 300 billion U.S. dollars in imports from China.

During the regular session, Apple Inc gained 1.9 percent after recent heavy losses.

(With input from Reuters)