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Wall Street stocks went from famine to feast Wednesday, opening sharply lower but finishing with solid gains as investors shifted from fearing an imminent US-China trade war, to resuming a wait-and-see approach.
Headlines on the worsening tiff between the world’s two biggest economies hung over global markets, with Beijing unveiling plans early Wednesday to hit major US exports in retaliation for US tariff plans detailed on Tuesday. 
The Dow whipsawed nearly 800 points between its session low and peak before finishing with a gain of one percent at 24,264.30.
Analysts said the catalyst for the turnaround was comments by recently-installed White House economic advisor Larry Kudlow who suggested President Donald Trump’s strident approach to China was a negotiating tactic to win concessions.
‘I understand the stock market anxiety. I get that,’ Kudlow told Fox Business. ‘I think at the end of this whole process, the end of the rainbow, there’s a pot of gold.’ 
The market’s swoon early in the day was ‘probably an overreaction,’ said Art Hogan, chief market strategist at Wunderlich Securities.
Investors are hoping Trump’s execution of the China tariffs mirrors his handling of steel and aluminum tariffs, which were announced with harsh rhetoric but later watered down with exemptions.
‘The market is hoping that, much like steel and aluminum, this is part of a negotiating tactic and we find a middle ground,’ Hogan said.
US investors also are taking solace from generally solid economic data, including reports Wednesday showing surprisingly robust private-sector jobs growth and continued health in the services sector.
Anthony Nieves of Institute for Supply Management, told reporters it was ‘too soon’ to see significant impact from tit-for-tat tariffs that have been announced but not implemented by the US and China.
‘The markets move a lot on what is potential and emotional and not so much as to what we’re seeing with real activity,’ he said.
Many analysts also are looking ahead to the upcoming earnings period, which is expected to be solid.
‘Trade war’?
Of the other markets, Hong Kong bore the heaviest weight, sliding 2.2 percent. 
Tokyo and London finished mildly higher, while Paris and Frankfurt dipped.
The volatility in the US underscored the thin line between investor confidence that Trump’s team will work through tensions with its Chinese counterparts to keep the global economy humming, and fears the fight with spiral out of control with catastrophic economic consequences.
‘When does a trade skirmish become a trade war?,’ asked Adam Slater, lead economist at Oxford Economics.
For now, he said, protectionist moves were having a small impact on the world economy.
‘But the seeds of a more serious conflict are there,’ Slater warned. ‘Possible warning signs would be US tariffs extending to Chinese industries such as consumer electronics and negative developments in the NAFTA negotiations and the US-EU trade relationship.’
Key figures around 2100 GMT
New York – Dow: UP 1.0 percent at 24,264.30 (close)
New York – S&P 500: UP 1.2 percent at 2,644.69 (close)
New York – Nasdaq: UP 1.5 percent at 7,042.11 (close)
London – FTSE 100: UP 0.1 percent at 7,034.01 (close)
Frankfurt – DAX 30: DOWN 0.4 percent at 11,957.90 (close) 
Paris – CAC 40: DOWN 0.2 percent at 5,141.80 (close) 
EURO STOXX 50: DOWN 0.2 percent at 3,340.19
Tokyo – Nikkei 225: UP 0.1 percent at 21,319.55 (close)
Hong Kong – Hang Seng: DOWN 2.2 percent at 29,518.69 (close) 
Shanghai – Composite: DOWN 0.1 percent at 3,131.84 
Euro/dollar: UP at $1.2278 from $1.2270 at 2100 GMT Tuesday
Dollar/yen: UP at 106.82 yen from 106.61  
Pound/dollar: UP at $1.4080 from $1.4057
Oil – Brent North Sea: DOWN 10 cents at $68.02 per barrel
Oil – West Texas Intermediate: DOWN 14 cents at $63.37 per barrel