Tensions between the U.S. and China over trade subsided a bit, giving U.S. investors a reason to wade back into stocks after a big sell-off a day earlier. Still, experts worried that recent actions taken by the two sides presage a prolonged battle.
China stabilized its currency Tuesday, suggesting it might hold off from aggressively letting the yuan weaken as a way to respond to U.S. tariffs on Chinese goods. That came a day after Beijing sent financial markets tumbling by allowing the currency to fall to an 11-year low against the dollar.
A weaker yuan can help neutralize U.S. tariffs on Chinese goods by making them more price-competitive on international markets. The Chinese currency declined to 7.0562 to the dollar before strengthening back to 7.0264.
The U.S. Treasury Department on Monday officially declared that China improperly manipulates the yuan's value just hours after President Donald Trump accused China of currency manipulation. American officials have long complained that a weak yuan makes China's export prices unfairly low, hurting foreign competitors and swelling Beijing's trade surplus.
The designation could open the way to possible new penalties on top of tariff hikes already imposed on Chinese goods in a fight over Beijing's trade surplus and technology policies.
Things were calmer on Tuesday. After falling 3% Monday, the S&P 500 index rose 1.3% its first gain in seven days.