Nasdaq Index exceeded 7,000 on promises from China

U.S. stocks broke out Tuesday morning, led by a sharp recovery in the tech-heavy Nasdaq after China pledged more stimulus measures to help reverse a moribund economy. Wall Street’s major indexes were back on solid footing Tuesday morning after posting their first back-to-back losses of the year. The broad S&P 500 Index jumped 0.9% to 2,605.03, led by a sharp recovery in communication services and information technology shares.

Surging tech shares lifted the Nasdaq Composite Index back above 7,000 for the first time in a month. The technology-focused average reached a session high of 7,005.47. It currently trades at 6,986.46, having gained 1.2%. Dow industrials also rose sharply, gaining 118 points, or 0.5%, to 24,021. Dow futures traded sideways ahead of the opening bell, which resulted in a weak start to the session Tuesday morning.

The CBOE Volatility Index, commonly known as the VIX, tracked lower Tuesday morning. The so-called “fear index” is presently down 2.2% at 18.65 on a scale of 1-100 where 20 represents the historical average. The Chinese government has announced a coordinated plan to stimulate economic growth after the latest batch of trade figures cast a dark shadow over the world’s second-largest economy. The People’s Bank of China (PBOC) has not only pledged to make monetary policy more forward-looking but has also announced plans to keep liquidity “reasonably ample.”

China’s finance ministry is also planning to cut taxes and boost government spending this year. This includes lowering value-added tax rates on select companies and offering rebates to others. These combined efforts are intended to lower the burden on smaller companies, especially those with exposure to manufacturing.