The US benchmark stock indices closed a North American session sharply lower. The S&P 500 fell 1.04%, the Nasdaq 100 dropped 1.13%, and the Dow Jones Industrial Average plunged 1.66%.

While the US stock market has got stuck in a downtrend, China's stock indices are reviving after traders returned from a nine?day break for the lunar New Year. This countertrend is driven by several factors. On the one hand, there is optimism about a possible easing of US tariffs, which could improve trade relations between the world's two largest economies. On the other hand, strong focus on developing domestic technologies is fueling investor interest in related companies. Together these factors can offset mixed signals about holiday spending, which traditionally plays an important role in China's economy.

The CSI 300 index, which tracks the 300 largest companies listed on the Shanghai and Shenzhen exchanges, closed Tuesday up a solid 1%. Technology stocks in particular were among the market's best performers, indicating that investors are betting on innovation and believe in the potential of China's tech sector despite overall uncertainty.

Meanwhile, Hong Kong stocks pulled back after Monday's hefty rally. That dynamic may reflect profit-taking by investors who rode the prior day's gains, or a greater sensitivity of the Hong Kong market to global economic signals. Nevertheless, the broader trend in China remains positive, which could shape expectations for further recovery.

Chinese investors clearly welcomed last Friday's US Supreme Court decision to strike down President Donald Trump's retaliatory tariffs. Although Trump later announced plans to introduce a global 15% rate, Morgan Stanley projects that the average tariff on Chinese goods will fall from 32% to 24%.

"China approaches the upcoming talks with the US from a stronger position after the Supreme Court ruling on tariffs," Allspring Global Investments said. "Retail investor sentiment improved after the Chinese New Year thanks to positive signals about progress in the tech sector shown during the 2026 Spring Festival."

Interestingly, this year, China's stocks underperformed global peers as regulators sought to curb speculative optimism in certain market segments — from carrier-rocket developers to AI app companies.

Technical outlook for the S&P 500

The main task for buyers today is to overcome immediate resistance at 6,854. That would signal upside and open the way to push toward 6,871. Another priority for bulls is holding above 6,883, which would strengthen buyers' position. On the downside, amid falling risk appetite, buyers need to defend the 6,837 area. A break below that level would quickly drive the instrument back to 6,819 and open the path to 6,801.