By Sue Chang, MarketWatch , Ryan Vlastelica

Tesla shares drop on report of Justice Department probe

U.S. stocks came off earlier highs but still closed up Tuesday as investors shrugged off escalating trade tensions to instead focus on the robust economy.

The gains were underpinned by consumer-discretionary and industrial shares--the so-called cyclical sectors which tend to thrive during periods of strong economic growth.

How did major benchmarks fare?

The Dow Jones Industrial Average climbed 184.84 points, or 0.7%, to 26,246.96. The S&P 500 index advanced 15.51 points, or 0.5%, to 2,904.31 and the Nasdaq Composite Index climbed 60.32 points, or 0.8%, to 7,956.11.

What drove the market?

President Donald Trump on Tuesday reiterated his hard stance on China during a press conference with Polish President Andrzej Duda and said the U.S. has "no choice" but to levy another $267 billion in duties on China.

Trump had already announced new tariffs on about $200 billion (http://www.marketwatch.com/story/trump-to-impose-another-200-billion-in-tariffs-on-chinese-goods-2018-09-17) in Chinese goods late Monday and threatened additional penalties as part of his campaign to pressure Beijing to change its commercial practices.

In response, China retaliated with tariffs of 5% to 10% (https://www.wsj.com/articles/chinese-officials-scramble-to-respond-to-trumps-new-tariffs-1537275015?) on $60 billion worth of U.S. products that will take effect Sept. 24 and said it may introduce more measures if the U.S. goes ahead with higher tariffs, according to The Wall Street Journal.

See:China-U.S. trade war will last for 'maybe 20 years,' says China's best-known CEO (http://www.marketwatch.com/story/china-us-trade-war-will-last-for-maybe-20-years-says-chinas-best-known-ceo-2018-09-18)

Trade has been a headline risk for months, and while it has increased day-to-day volatility, the broad indexes have largely ground higher, supported by strong growth in corporate earnings and improving economic data.

What were analysts saying?

"In my opinion, I see President Trump as trying to force the trading partners to the bargaining table to renegotiate trade deals that have long favored other countries over the U.S. His methods are unconventional but the U.S. economy is strong, earnings are healthy and confidence among consumers and investors remains high," wrote Robert Pavlik, chief investment strategist at SlateStone Wealth, in a note to clients.

"Trump promised to take on trade during his run for presidency and with the recent announcement that the U.S. intends to raise the amount of products coming under tariff inclusion will ensure that this is an issue that will not go away quietly but we remain hopeful that eventually these tactics remain in check and will conclude amicably and without a lasting negative impact to global growth," he said.

Louis Kuijs, head of Asia economics at Oxford Economics, said that the trade war could be prolonged as the U.S. government seems confident about winning and as a result, be reluctant to consider concessions to de-escalate the conflict.

Trade-war tracker: Here are the new levies, imposed and threatened (http://www.marketwatch.com/story/trade-war-tracker-here-are-the-new-levies-imposed-and-threatened-2018-06-22)

What stocks were in focus?

Tesla Inc.(TSLA) shares slid 3.4% after Bloomberg reported that the electric car company is under investigation by the Justice Department (http://www.marketwatch.com/story/tesla-stock-tanks-after-report-company-faces-criminal-probe-over-musks-tweet-2018-09-18-121035917) over tweets from Chief Executive Elon Musk last month about taking the company private.

Shares of Oracle Corp. (ORCL) fell 0.3% a day after the software company reported quarterly revenue that missed expectations (http://www.marketwatch.com/story/oracle-earnings-show-another-cloud-miss-stock-falls-2018-09-17), hurt by weaker-than-expected cloud-services sales.

Visa Inc.(V) and Mastercard Inc.(MA)agreed to settle a class-action lawsuit (http://www.marketwatch.com/story/visa-mastercard-settle-us-retailers-class-action-suit-2018-09-18) brought by U.S. retailers in 2005. Shares of Visa rose 1% while Mastercard gained 1.7%.

General Mills Inc.(GIS) slumped 7.6% after it reported revenue below forecasts even though adjusted first-quarter earnings beat expectations (http://www.marketwatch.com/story/general-mills-tops-profit-estimate-as-sales-fall-slightly-short-2018-09-18).

AutoZone Inc. (AZO) fell 2% after it reported adjusted fourth-quarter earnings that beat expectations while revenue came in below forecasts. Same-store sales also grew less than had been expected (http://www.marketwatch.com/story/autozones-stock-sinks-after-profit-beats-but-sales-miss-2018-09-18).

Red Hat Inc.(RHT) shares fell 1.2% after it was downgraded to neutral by JPMorgan analysts.

Viking Therapeutics Inc. (VKTX) surged 87% after it reported positive results (http://www.marketwatch.com/story/viking-therapeutics-announces-positive-results-in-trial-of-non-alcoholic-fatty-liver-treatment-2018-09-18) in a midstage trial of a treatment for nonalcoholic fatty liver disease.

What were other markets doing?

Asian stocks rallied as investors shrugged off the latest news on tariffs (http://www.marketwatch.com/story/asian-markets-mostly-shrug-off-latest-us-tariffs-targeting-china-2018-09-17). However, the region has struggled lately, and recently traded at four-year lows. Major European indexes were mostly higher (http://www.marketwatch.com/story/europe-stocks-limp-along-dented-by-trade-war-headlines-2018-09-18).

Crude-oil prices saw strong gains (http://www.marketwatch.com/story/oil-rallies-as-saudi-arabia-said-to-grow-comfortable-with-crude-above-80-a-barrel-2018-09-18) and gold settled lower (http://www.marketwatch.com/story/gold-churns-above-1200-as-dollar-stocks-react-cautiously-to-deepening-trade-fight-2018-09-18). The U.S. dollar index was moderately higher (http://www.marketwatch.com/story/dollar-finds-footing-as-us-china-trade-fight-intensifies-2018-09-18).

(END) Dow Jones Newswires

September 18, 2018 16:30 ET (20:30 GMT)