US stocks took quite a leap early on Wednesday, in the latest round of enigmatic twists in the current US-China trade story. While the energy settled by the end of day, President Trump indicated that he could potentially use Huawei chief financial officer Meng Wanzhou’s arrest as a type of bargaining chip to help move along his trade talks.
Indeed, early in the day, the Dow Jones Industrial Average surged by nearly 500 points—at least for a little while—before settling back down. Still, by the end of the day, the Dow came to rest at 157 points, mostly led by gains among US companies who have definitive exposure and ties to China. This includes large companies with which you are probably quite familiar; companies like 3M (MMM), Apple (AAPL), Boeing (BA), and Caterpillar (CAT).
The Standard & Poors Index also rose on Wednesday but came to rest with only a slightly higher margin at the close of day. The Nasdaq Composite also finished up nearly 3 percent.
It should be noted, too, that both China’s Shanghai Composite and Hong Kong’s Hang Seng indexes also made some big strides on Wednesday. Sure enough, Chinese companies with big trade relationships with the United States—namely Alibaba (BABA), Baidu (BIDU), and JD (JD)—all closed higher than they started.
But it was not just Wanzhou’s controversy that helped bump US stocks. The Wall Street Journal also released a report which suggests that China could be interested in loosening some of the reins over its protective stances, which will allow the US—and other foreign—companies more access to the Chinese market.
The market has been quite volatile over the past few weeks. That is to be expected, of course, with US-China trade relations hitting many obstacles and with the arrest of Huawei’s Meng. Of course, market volatility is not necessarily a bad thing as trade uncertainty can actually be good for investors who can strike while the iron is hot and focus more on corporate earnings. It is an opportunity to establish a stable foundation for more growth.