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Stocks close sharply higher after plunging on trade jitters

CNBC logo CNBC 4/4/2018 Fred Imbert and Alexandra Gibbs
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Stocks made a roaring comeback Wednesday, bouncing off steep losses stemming from China's announcement of new tariffs on U.S. goods. The Dow rallied more than 700 points from lows of the day.

The index ended 230 points higher, the S&P 500 gained 1.15 percent, and the Nasdaq jumped 1.45 percent. At session lows, the Dow fell 510 points, while the S&P 500 and Nasdaq plunged as much as 1.6 percent and 1.9 percent, respectively. 

"We have a very emotional tape," said Jeff Kilburg, the CEO of KKM Financial. "When you have so much emotion, you're going to see some volatile moves. . . . The emotional tape presents investors with a buying opportunity," he said. 

Apple helped lead the comeback in the market, rising 2.1 percent. Chip stocks also rebounded, with Micron and Advanced Micro Devices rising sharply.

Automakers Ford and General Motors rose after falling sharply earlier on Wednesday. But Boeing and Caterpillar, two companies that could be adversely affected by a trade war, both held lower. Deere also pulled back.

China's Ministry of Commerce said the tariffs are designed to target up to $50 billion in U.S. products annually and would hit goods like soybeans and cars.

The move comes less than a day after President Donald Trump issued a list of Chinese imports that the U.S. administration aims to target as part of a crackdown on what the president sees as unfair trade practices.

Automakers were down, with Ford and General Motors slipping. Boeing also pulled back, falling more than 3.5 percent. Caterpillar declined 2.8 percent, while United Technologies — another Dow component — fell 1.7 percent.

Perceived safe-haven assets got a bid higher on Wednesday. Gold futures rose 0.6 percent to $1,344.80 per ounce while the 10-year U.S. Treasury yield fell to around 2.76 percent. Bond yields move inversely to prices.

Trump tweeted later in the morning: "We are not in a trade war with China, that war was lost many years ago."

Wednesday's moves come a day after the major indexes closed sharply higher as tech rebounded from steep losses seen in Monday's sessions.

In economic news, the ADP National Employment Report showed private companies added 241,000 jobs in March, more than the expected gain of 205,000.

The services purchasing managers' index (PMI) slipped to 54.0 in March from 55.9 in February. Meanwhile the non-manufacturing ISM index came in at 58.8 for last month, missing expectations.

CNBC's Sam Meredith contributed to this report.

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