US open: Stocks surge at the bell as trade tensions subside somewhat

Trading on Wall Street began on a positive note on Tuesday, with markets' focus shifting somewhat from trade concerns to monetary policy as several central banks across the globe geared up to reveal whether or not they would adjust interest rates.

As of 1525 BST, the Dow Jones Industrial Average was up 1.19% at 25,114.75, while the S&P 500 had picked up 1.00% to 2,771.97 and the Nasdaq traded 1.07% firmer at 7,411.20.

The Dow opened 294 points higher on Tuesday after recording just a four-point gain in the previous session which also saw the tech-laden Nasdaq Composite enter correction territory after investors grew worried about stricter regulations being slapped on the likes of Alphabet, Apple, Amazon and Facebook.

In Fed action, Chair Jerome Powell said the central bank would "act as appropriate to sustain the expansion".

However, he added that the Fed did not know "how or when" global trade issues would be resolved. "We are closely monitoring the implications of these developments for the US economic outlook."

Earlier, Chicago Fed President Charles Evans said that the US economy was continuing to perform well, but he expressed concern about low levels of inflation.

In an interview with CNBC, Evans - a voting member of the Federal Open Market Committee - said the fundamentals of the US economy remained solid. He also said he was "a little nervous" that inflation was under-running the Federal Reserve's 2% objective.

"I frankly would be a little more aggressive than most in terms of defending our 2% symmetric inflation objective," he said.

A day earlier, St. Louis Fed chief James Bullard raised expectations that the central bank was moving towards a rate cut.

Bullard stated an interest rate cut "may be warranted soon" due to the rising risk to economic growth posed by global trade tensions and weak inflation in the States.

Staying with global central bank theme, overnight the Reserve Bank of Australia cut its cash rate by 25 basis points to 1.25%, arguing that it will support the labour market and cement inflation's rising path back towards target, with recent inflation outcomes having been "lower than expected".

Investors were also expecting looser policy from the European Central Bank and the Swiss National Bank - which already had the dubious honour of having the world's lowest interest rates.

In trade news, China's Ministry of Commerce said on Tuesday that its trade conflict with the US could only be resolved through further talks.

"The Chinese side always believes that the differences and frictions between the two sides in the economic and trade field will ultimately need to be resolved through dialogue and consultation," a spokesperson from the Ministry of Commerce said.

"It is hoped that the US will abandon its wrong practices and work in tandem with the Chinese side. In the spirit of mutual respect, equality and mutual benefit, we will control differences and strengthen cooperation to jointly safeguard the healthy and stable development of China-US economic and trade relations."

However, in retaliation, Washington accused Beijing of playing the "blame game" by misrepresenting why trade talks between the two powers had broken down.

"Our negotiating positions have been consistent throughout these talks, and China backpedalled on important elements of what the parties had agreed to," read a statement from the Office of the United States Trade Representative.

The statement said the US was "disappointed" China had chosen "to pursue a blame game misrepresenting the nature and history of trade negotiations between the two countries".

Turning attention south of the border, Mexican Foreign Minister Marcelo Ebrard said on Tuesday that he was anticipating that the US and Mexico would find common ground on immigration and trade.

Republican lawmakers were also discussing whether they should step in and vote to stop the new tariffs on Mexican goods threatened by Trump from coming into effect, according to the Washington Post.

Elsewhere, on the second day of his state visit to Britain, Donald Trump said: "As the UK makes preparations to exit the European Union, the United States is committed to a phenomenal trade deal between the US and the UK."

"There is tremendous potential in that trade deal — I say probably two and even three times of what we are doing right now," Trump told reporters.

The 10-year Treasury note yield rose, after plumbing its lowest level in more than a year-and-a-half just the day before

On the data front, new orders for American-made manufactured goods fell in April with shipments falling by the most in two years, pointing to continued weakness in factory activity.

Factory goods orders declined 0.8%, dragged down by weaker demand for transportation equipment, primary metal, computers and electronic orders, according to the Commerce Department. Data for March meanwhile was revised down to show factory orders increasing 1.3% instead of the previously reported 1.9% surge.

In corporate news, Cracker Barrel shares were up 3.53% in early trading after the company topped third-quarter profit estimates, while jeweller Tiffany & Co's stock was up 2.54% despite experiencing a currency squeeze in its first quarter.

Uber shares were changing hands 0.96% lower despite analysts at Bank of America Merrill Lynch initiating coverage on the ridesharing firm at 'buy'.

Cloud-based software company Salesforce.com was to report earnings after the close.