Stocks open slightly higher Tuesday after Monday's plunge

U.S. markets traded slightly higher on Tuesday, holdling most of Monday's steep losses on the escalating trade war with China.

On Tuesday, the Dow Jones Industrial Average close 311.78 points or 1.21% percent higher at 26,029.52. The tech-heavy NASDAQ ended the day up 1.39% at 7,833.27. The benchmark S&P 500 closed 1.30% higher at 2,881.77.

The escalating trade war with China worries traders, sending stocks tumbling on Monday -- the worst day of the year for the Dow.

On Monday, the U.S. Treasury Department designated China a currency manipulator, and issued a statement which said that Secretary Steven Mnuchin "will engage with the International Monetary Fund to eliminate the unfair competitive advantage created by China's latest actions."

China stabilized its currency overnight.

President Donald Trump has threatened a new round of tariffs that would go into effect on Sept. 1 if the trade war continues. The new round of import taxes will affect almost everything that hasn't already been taxed yet from China. As a result, manufacturers and retailers of those affected goods took heavy losses on Monday.

Apple, which has invested heavily in China for manufacturing, led Monday's decline in stocks. Nike, Macy's and Best Buy also posted big losses.

ABC News' Taylor Dunn contributed to this report.