US stocks rise as stimulus optimism outweighs China tensions

• US stocks climbed on Wednesday as traders weighed inflamed tensions with China, a potential extension to bolstered unemployment benefits, and coronavirus vaccine news.
• Concerns about a fresh US-China conflict intensified after the US ordered the closure of China's Consulate in Houston. China vowed to implement "firm countermeasures."
• Reports of the GOP considering a stop-gap extension for expanded unemployment benefits eased some fears of the program expiring at the end of the month.
• Earnings disappointments from United Airlines and Snap weighed on the market.
• Oil fell from four-month highs, with West Texas Intermediate crude futures dropping as much as 2%, to $41.14 per barrel.
• Watch major indexes update live here.

US stocks rose on Wednesday as traders weighed the prospects of a new spending bill against inflamed tensions with China.

Fears of a worsening US-China relationship escalated as the US unexpectedly ordered the closure of China's Consulate in Houston. The State Department said it was meant "to protect American intellectual property and Americans' private information."

China said it would exact "firm countermeasures" against the US. The tit-for-tat revived strains between the countries after a period of relative stability.

Here's where US indexes stood at the 4 p.m. ET market close on Wednesday:

• S&P 500: 3,276.05, up 0.6%
• Dow Jones industrial average: 27,005.73, up 0.6% (165 points)
• Nasdaq composite: 10,706.13, up 0.2%

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Meanwhile, investors are hoping that Congress will pass a new spending bill before the $600 weekly unemployment-insurance boost is exhausted at the end of the month. Republicans are mulling an extension to the program through the rest of the year to avoid its expiration.

In economic data, credit card spending growth stalled in mid-July after months of improvement, JPMorgan said in a note. Activity now sits roughly 10% lower from the year-ago period as virus cases increase throughout the country and risk a prolonged recession.

The overall slowdown in spending growth suggests "the rapid economic rebound seen in May and early June has lost momentum but not reversed," Jesse Edgerton, senior economist at JPMorgan, said.

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A couple of earnings misses also weighed on investor sentiments. Snap shares plunged after the company missed second-quarter estimates for daily active users.

United Airlines declined after posting a quarterly loss of $1.62 billion and an 87% year-over-year drop in revenue.

Much-anticipated reports from Microsoft and Tesla are due after Wednesday's close. Tesla's report carries more weight than usual, as it stands a chance of entering the S&P 500 if it posts another quarterly profit.

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Some companies soared above the pack. Pfizer shares tore higher after it announced that the US government placed a $1.95 billion order for 100 million doses of its experimental coronavirus vaccine. The government stands to buy another 500 million additional doses under the agreement.

Units of Pershing Square Tontine Holdings, Bill Ackman's blank-check company, leaped as much as 9% after the firm's IPO. The SPAC raised $4 billion in its debut, setting a record for such companies. Ackman's acquisition vehicle is also unique in that it doesn't plan to take any compensation from its deals, the hedge fund billionaire told CNBC.

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"We set up an alignment that's very appealing to investors. We created the most investor-friendly SPAC in the world," Ackman said.

Oil slid after hitting a four-month high the prior day. West Texas Intermediate crude dipped as much as 2%, to $41.14 per barrel. Brent crude, the international benchmark, fell 1.6%, to $43.62 per barrel, at intraday lows.

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