US stocks rallied from an early jolt and finished higher as Wall Street investors bet that back-and-forth tariff threats between the US and China will not blossom into a bigger dispute that damages global commerce.
The Dow Jones industrial average plunged 501 points after the opening bell but made it all back, and more.
Household goods makers, retailers and constructors led the way while technology companies reversed some early losses.
But two major targets of China's possible tariffs, aerospace company Boeing and farm equipment maker Deere, finished lower.
The early declines followed an announcement by the Chinese government that it plans to impose tariffs of 25% on a list of US goods worth 50 billion US dollars, including soybeans and aircraft.
The US plans to place tariffs on a similar amount of Chinese goods, including industrial robots and telecom gear, subject to potential tariffs to protest Beijing's alleged theft of US technology.
But investors relaxed as both sides emphasised a willingness to talk.
President Donald Trump's top economic adviser, Larry Kudlow, suggested the US tariffs will not be implemented if China lowers barriers to trade.
Others noted the two countries have too much to lose from a trade war.
"The most likely outcome is smoke, but no fire," said Bill Adams, senior international economist at PNC Financial.
"The amount that both countries have invested in bilateral trade cooperation and economic cooperation is so significant that the costs of going back would be very painful, and more than either country would want to bear."
US trade policy has loomed over the markets since early March.
Over the last five weeks stocks have plunged numerous times as investors reacted to tariff developments with shock and concern that an increase in protectionism will hurt international trade and company profits.
But often, investors have caught their breath and decided that a full-blown trade war is unlikely, resulting in sharp recoveries.
On Wednesday, both of those things appeared to happen in the same day.
The Dow Jones industrial average advanced 230.94 points, or 1%, to 24,264.30, after a swing of more than 700 points. The S&P 500 index climbed 30.24 points, or 1.2%, to 2,644.69.
The Nasdaq composite rose 100.83 points, or 1.5%, to 7,042.11. The Russell 2000 index of smaller-company stocks gained 19.51 points, or 1.3%, to 1,531.66.
Boeing, which delivered one-fourth of all its planes to China last year, fell as much as 5.7% early on and finished with a loss of 3.38 dollars, or 1%, at 327.44 dollars.