The S&P opened below its 200-day moving average, a key technical level, but inched above as the session progressed, and by afternoon was in positive territory, joined by the Nasdaq and then the Dow.
The Dow Jones Industrial Average has gained 268.78 points, or 1.11%, to 24,533.08, while the S&P 500 has added 19.83 points, or 0.75%, to 2664.52, and the Nasdaq Composite has risen 55.36 points, or 0.79%, to 7097.47.
Analysts had expected the markets to drop drastically after China hit back on the USA with a 25% tariff on 106 products.
Beijing hit back against USA plans to impose tariffs on $50 billion in Chinese goods, with proposals for a list of similar duties on key American imports including soybeans, planes, cars, beef and chemicals.
The announcement by China came shortly after the US Trade Representative published a proposed list of products imported from China that could be subject to additional tariffs.
Trump threatened to slap $100 billion more in tariffs on Chinese imports, while Beijing said it was fully prepared to respond with a "fierce counter strike".
"It's a reaction to concerns about the administration's approach to trade".
"We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the US", Trump tweeted. "We can not let this continue!"
ADP said employment surged up by 241,000 jobs in March after jumping by an upwardly revised 246,000 jobs in February.
Before the session started, a Labor Department report showed nonfarm payrolls increased by a smaller-than-expected 103,000 last month.
"For the most part, currency markets seem to be taking the tit-for-tat trade war threats with a grain of salt".
Other energy stocks are also performing well even though the price of crude oil for May delivery is inching up just $0.15 to $63.52 a barrel.
Lennar (LEN) is posting a standout gain after the homebuilder reported first quarter results that exceeded analyst estimates on both the top and bottom lines. Japan's Nikkei 225 Index inched up by 0.1%, while Hong Kong's Hang Seng Index plunged by 2.2%. The Philadelphia semiconductor index fell 0.54 per cent.
"The stock market is in a bit of a tug of war", says Allen Bond, portfolio manager of the Jensen Quality Growth Fund.