Industrials Up as Fed Policy Seen as Silver Lining in Trade Dispute -- Indust..

Shares of manufacturing and transportation companies rose after an initial plunge as traders bet trade tensions with China wouldn't significantly change the course of economic growth. "One of the things that seemed to turn things around in terms of today's trading activity [was] when [Cleveland Federal Reserve President] Loretta Mester spoke," said Oliver Pursche, chief market strategist at broker-dealer Bruderman Brothers. "She indicated that the potential of trade wars would kind of throw a wrench into the Fed's expectations for rate hikes." The surge in stocks was a reflection of traders recognizing the silver lining in any trade war--a less hawkish Fed. Further, Mr. Pursche said, first-quarter earnings are expected to rise sharply, which could provide further fuel for gains. China said it would respond to tariffs on $50 billion of its exports by imposing a 25% retaliatory tariff on critical American exports, including airplanes and cars. Shares of Boeing initially slid, bringing the aerospace giant about 10% below its February highs on fears that its competitive position in China would be weakened. General Motors, another concern with links to the Chinese market and suppliers, also recovered from early losses. Hyundai shares rose after reports that activist hedge fund Elliott Management had amassed a $1 billion stake in the Korean car giant.

-Rob Curran, [email protected]