Stocks shook off an early slump and marched higher in afternoon trading Wednesday, led by solid gains in Microsoft, Facebook and Google.
The flip-flop marked the latest reversal for a stock market that has been whipsawed by worries over the worsening trade relationship between China and the U.S. and the fallout it may have on the broader global economy. The market plunged Monday, bounced back Tuesday and see-sawed Wednesday.
Major carmakers turned higher following media reports that the U.S. is planning to delay new tariffs on car and auto part imports from Europe. The proposed tariffs would add another front to U.S. trade disputes and increase investors' anxiety.
Both European and U.S. automakers stand to suffer from retaliatory tariff increases that would cut into international sales. Ford rose 1.3 percent, Fiat Chrysler rose 1.4 percent and General Motors rose 0.8 percent.
Banks were still lower following a steep drop in bond yields. Bond prices rose sharply, sending yields lower, after some surprisingly disappointing economic data in the U.S. including weak figures on retail sales and industrial production.
The yield on the 10-year Treasury note, which is used to set rates on many kinds of loans including mortgages, fell to 2.37 percent from 2.42 percent late Tuesday, a large move.
That drop in yields hurts banks because it cuts into profit from interest on loans. Bank of America fell 1 percent and Citigroup fell 0.5 percent.
Technology stocks were mixed. Microsoft rose 1.1 percent, but chipmakers, which are heavily dependent on China for sales, remained weak. Nvidia fell 1.3 percent.
Safe-play stocks held up well. Real estate companies and makers of consumer products rose. PepsiCo rose 1.6 percent.
Analysts have been warning that the stock market will remain volatile as long as the U.S. and China remain locked in their latest spat. The latest flare-up began last week when President Donald Trump threatened, then followed through on raising more tariffs on Chinese goods. China responded earlier this week with plans for its own increased tariffs on U.S. goods.
The escalation surprised investors who had been expecting a resolution. That confidence was a key component of the stock market's sharp gains so far this year.
KEEPING SCORE: The S&P 500 index rose 0.6 percent as of 1 p.m. The Dow Jones Industrial Average rose 103 points, or 0.4 percent, to 25,635. The Nasdaq rose 0.8 percent. Small-company stocks lagged the market. The Russell 2000 index was little changed.
ANALYST'S TAKE: The rally on Wednesday could be a case of investors reading too much into what is otherwise good news on the trade front. In this case, the potential delay in tariff increases for European cars could signal something more worrisome.
"The market is having an overly optimistic reaction to the small kernels of positive news flow that have come out today," said Kristina Hooper, chief global market strategist at Invesco. "I would argue the developments we heard today only underscore the precarious situation the U.S. is in with China."
POSITIVE FLOW: Progressive rose 5.1 percent after it gave investors a solid first quarter earnings report and renewed its stock buyback plan. The insurance company reported a sharp rise in written premiums.
RECALIBRATING: Agilent plunged 12.4 percent after cutting its revenue forecast for the year following a disappointing first quarter. The scientific instruments maker reported first quarter profit and revenue that fell short of Wall Street forecasts.
SHOPPING FOR PROFIT: Alibaba Group Holding rose 1.3 percent after the online retailer blew past Wall Street forecasts for first quarter profit. The Hong Kong-based company also beat revenue forecasts for the quarter.