By Michael Wursthorn and Ben St. Clair
-- Stocks rebound from Wednesday's fall
-- China guides currency lower
U.S. stocks rose Thursday, putting major indexes on track for a rebound from a midweek selloff.
Shares of technology companies led the stock market higher. A major software-deal announcement appeared to fuel the buying spree, sending the S&P 500 technology sector up more than 1%.
Meanwhile, investors momentarily put aside their brewing trade concerns a day after the Trump administration threatened tariffs on an additional $200 billion of products from China, including bicycles, refrigerators and pocketbooks. Beijing is currently reviewing plans to hit back beyond levies on imports, although no new policies have been announced.
"We don't know how it's going to pan out," said Tom Martin, a senior portfolio manager at Globalt Investments. "But the market is understanding more and more that President [Donald] Trump isn't bluffing."
The Dow Jones Industrial Average rose 213 points, or 0.9%, to 24917 in recent trading. The S&P 500 gained 0.8%, while the tech-heavy Nasdaq Composite added 1.2%.
CA led tech firms and the broader S&P 500 higher after Broadcom agreed late Wednesday to buy the software company for $18.9 billion. Shares of CA rose 18% and appeared to boost the stocks of other software companies that trade in the S&P 500, including Red Hat and Autodesk, up more than 3% each, while Salesforce.com added 2.4%.
Meanwhile, industrial companies, including aerospace firms, also contributed to Thursday's better performance, recovering some of the losses those firms suffered during Wednesday's trade-fueled selloff. Shares of Lockheed Martin rose 2%, while Boeing, a Dow component, added 1.5%.
Airline stocks got a boost after Delta Air Lines reported profits that beat analyst expectations, even though the company said higher fuel costs will weigh on profits for the rest of the year. Shares of Delta added 1.5%.
While the trade spat between the U.S. and China continues to play out, investors will be focusing on the glut of second-quarter earnings results that are expected to be released in the coming weeks to glean clues on how the ongoing trade rhetoric is affecting companies and how businesses are faring with higher commodity prices.
Overall, profit results are expected to build on the strong first quarter, analysts said. Companies continue to enjoy the one-time benefits of the tax overhaul passed last year, while the global growth upswing last year has left businesses on better footing. S&P 500 companies are expected to increase second-quarter earnings 20% from a year earlier.
That should help stabilize stock prices and push major indexes higher, with analysts predicting a 13% price increase in the S&P 500 over the next 12 months, FactSet said.
Still, the potential for a full-blown trade war between the U.S. and China -- the two largest economies in the world -- could derail those gains and cause indexes to churn up and down, similar to how trade threats helped to sap some of the market's gains in June.
"We're at a situation where the markets have to react to the uncertainty, " said Jim Smigiel, chief investment officer of absolute-return strategies for SEI Investments.
The stock market also got a fresh sign that inflation is moving higher. The consumer-price index, which gauges the prices Americans pay on most goods, rose 2.9% from the year before, the highest level since February 2012, the Labor Department said.
Investors have been warming to the idea of rising inflation all year, especially after the January jobs report helped send major indexes into correction territory in early February. The latest data put inflation closer to where the Federal Reserve wants it, analysts said.
"Inflation doesn't look like it's getting out of control and to a place where people need to react," Globalt's Mr. Martin said.
Elsewhere, the Stoxx Europe 600 rose 0.8% and is up seven of the past eight trading days. In Asia, Hong Kong's Hang Seng was up 0.6%, while the Shanghai Composite Index rose 2.2%. Japan's Nikkei rose 1.2%.
Stocks in Asia rose after China's central bank guided the yuan to its largest one-day drop against the U.S. dollar in a year and a half. A weaker yuan makes Chinese exports more competitive and its goods more valuable abroad.
Write to Michael Wursthorn at [email protected]