Stock futures recovered from earlier losses to trade higher early Tuesday after White House trade advisor Peter Navarro clarified that the U.S.-China trade deal is not over.
The Dow Jones Industrial Average futures implied an opening gain of about 300 points. S&P 500 and Nasdaq futures also pointed to a positive open.
“My comments have been taken wildly out of context,” Navarro said in a statement. “They had nothing at all to do with the Phase I trade deal, which continues in place.”
President Donald Trump also tweeted that the existing trade deal remains in place.
Earlier in the session, Dow futures had dropped about 400 points. Futures plunged after Navarro’s Monday interview on Fox News’ “The Story.”
Fox’s Martha MacCallum asked, “Do you think that the president sort of … I mean, he obviously really wanted to hang onto this trade deal as much as possible. And he wanted them to make good on the promises because there had been progress made on that trade deal, but given everything that’s happened and all the things you just listed, is that over?”
“It’s over. Yes,” Navarro responded.
In his subsequent statement, Navarro said, ” I was simply speaking to the lack of trust we now have of the Chinese Communist Party after they lied about the origins of the China virus and foisted a pandemic upon the world.”
In his interview with Fox, Navarro said “the turning point” came when the U.S. heard about the coronavirus outbreak in China. Navarro claimed that the administration only heard about the virus after the trade deal between Washington and Beijing was signed on Jan. 15.
On Monday, the Dow Jones Industrial Average rose 153 points, or 0.6%. The S&P 500 also registered a gain, climbing 0.7%.
The Nasdaq Composite was the outperformer, rising more than 1%, thank to help from mega-cap technology companies. The close marks a record close of the technology-heavy index, its 20th of the year. Shares of Apple ticked up 2.6% and shares of Microsoft rose nearly 3%.
While stocks started the week on a strong foot, it came under thin trading. The SPDR S&P 500 ETF Trust (SPY), which tracks the broader market index, traded more than 67 million shares on Monday. That’s well below the ETF’s 30-day volume average of 105.01 million.
“The message today may be that the virus and the bull market can coexist,” Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC. “Despite back to back days of Covid19 cases above 30,000 over the weekend and ongoing reports of hot spots, the stock market managed to post a strong gain. Market action seems to suggests that investors expect the economy to continue improving in the months ahead even though the country is likely to experience spotty or temporary spikes in the virus.”
The major U.S. stock averages are coming off their fourth weekly gain in five weeks.
The number of newly confirmed coronavirus cases at home and abroad continues to increase, raising questions about economic recovery from the virus. The largest single-day increase in global coronavirus cases was recorded on Sunday, according to the World Health Organization, after more than 183,000 new cases were reported worldwide.
The U.S. saw more than 36,000 new cases reported on Sunday after more than 30,000 new cases were reported on both Friday and Saturday, data compiled by Johns Hopkins University showed. Widespread testing is contributing to the uptick in reported cases.
Texas Gov. Greg Abbott said at a news conference Monday that the coronavirus is spreading at an “unacceptable rate” in the state, according to NBC 5 in Dallas-Fort Worth.
White House economic advisor Larry Kudlow told CNBC on Monday “there is no second wave coming and that lawmakers will likely develop another stimulus package by the end of next month.
New home sales data from May will be released on Tuesday morning.
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Correction: Due to an editing error, this story was updated to reflect the correct spelling of Martha MacCallum’s name.