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The Dow Jones Industrial Average (DJIA) gained ground on Tuesday after a tumultuous late start to the new trading week for US equity markets. China imposed strict licensing requirements on any foreign entity trying to export rare earth minerals out of China last week, sparking a fresh trade tariff tirade from US President Donald Trump via social media. China responded by also ramping up port fees for foreign-bound ships in Chinese ports, and investors are once again growing apprehensive of a fresh uptick in global trade tensions at a time when the US is grappling with faltering job numbers.

Stocks rebound on hope, but dark clouds continue to gather

The Dow Jones fell into the 45,450 region during overnight and early trading hours before investors battled back with fresh optimism, pushing the major equity index back into the 46,500 zone as American markets piled back into the fold following a long weekend hiatus. 

The Trump administration has pivoted into something approaching recalcitrance toward the latest Chinese trade controls, threatening an additional 100% tariff on Chinese imports into the US to begin on November 1 if China doesn’t reconsider its protectionist trade policies. A Chinese crackdown on rare earths exports directly threatens the stability of several key US industries, including defense, tech, energy, and health services.

Citigroup (C ) and Wells Fargo (WFC) both turned firmly bullish on Tuesday after posting better-than-expected earnings before the market open, and investors will be looking for the rest of the Q3 pack of earnings reports to keep the gravy train running.

Government shutdown continues to crimp the flow of critical market data

Key US data remains limited amongst the ongoing US government shutdown. US Producer Price Index (PPI) inflation numbers, as well as the latest Retail Sales figures, would have been due later this week, but the Bureau of Labor Statistics (BLS) remains unable to release numbers while 750,000 federal workers are facing furlough. Federal departments are coming under increasing pressure as the Trump administration begins a sweeping wave of federal terminations that could reach into the tens of thousands, ensuring that when the US government does return to work, the backlog of unperformed work will be even more difficult to work through.

Dow Jones daily chart

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