Image copyright Reuters Image caption The market was hit hard on Friday but recovered on Monday

Banks and energy stocks led Wall Street higher on Monday, following solid gains in Asia and Europe.

Technology stocks and global stock markets fell on Friday on fears that the trade spat between the US and China was escalating.

Monday’s rally picked up as technology companies rose. Intel jumped 3.7% and Apple closed up 0.2%.

The Dow Jones Industrial Average closed up 167 points (0.8%) at 26,186.12. The S&P 500 was up 5.8 points (0.3%) at 2,941.63. The Nasdaq Composite closed up 22.63 points (0.3%) at 7,540.88.

Monday’s gains saw the Dow end slightly up for the week. However, it is down 1.2% for the month, and is on track for its worst monthly performance since December.

Thursday’s comments from Donald Trump’s economic adviser Larry Kudlow appeared to bring some stability to the market.

He downplayed talk of a full-scale trade war between the US and China and downplayed the notion that Washington’s move to slap tariffs on $34bn of Chinese imports would quickly escalate.

Mr Kudlow, who joined Mr Trump’s White House earlier this year, said on a conference call that trade tensions between China and the US could be “contained”.

Nevertheless, the US was still ready to tax $16bn worth of goods from China, as well as impose punitive tariffs on some Russian and European exports.

Europe markets rose by 0.7% on Monday, although Monday’s rebound failed to drag down the week’s losses.

Disappointing data releases and higher-than-expected inflation numbers for June spooked European markets, after data last week showed that British consumer spending had ground to a halt in May.

Other risk factors to watch in the US include a tightening in monetary policy following last week’s Federal Reserve’s decision to hike interest rates by 25 basis points to 1.75%.

Analysts expect the Fed to raise rates three times in the rest of the year, which could make dollar-priced assets such as US equities less attractive to investors, pushing down stocks.

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