S&P 500 hits record on trade angst easing

U.S. stocks climbed, sending the S&P 500 Index to an intraday record, as investors speculated the Trump administration would ease trade tensions with China.

The yen and Treasuries pared losses after President Donald Trump’s long-time lawyer pleaded guilty to federal charges.

Michael D. Cohen’s plea deal, confirmed after the markets closed in New York, included his saying he was directed to violate campaign law at the direction of a candidate for federal office.

Also following the regular trading session, Trump’s former campaign chairman, Paul Manafort, was found guilty of tax fraud, among other charges. The news sparked mild demand for haven assets.

Earlier, the S&P 500 Index capped a fourth day of gains, while a gauge of small-caps closed at an all-time high.

The dollar extended its slide ahead of low-level trade talks with China, and the 10-year Treasury yield rose for first time in three days before a meeting of central bankers later in the week.

“This is an abnormally sentiment-driven market that we’ve had all year, so a new high could cause on the margin some investors to either get nervous or to get bullish,” Max Gokhman, head of asset allocation for Pacific Life Fund Advisors, which manages US$40 billion, said in an interview at Bloomberg’s New York headquarters.

PROBABLY MORE NERVOUSNESS THAN BULLISHNESS.

“I would argue probably more nervousness than bullishness at this point because we’re hitting a new high amid failing trade talks with China, amid peaking margins.”

U.S. shares rose Tuesday amid signs that talks between Chinese and American trade representatives may lead to some cooling of rhetoric on the months-long spat.

The Trump administration plans to slap tariffs on US$16-billion worth of Chinese-made goods and China is poised to retaliate. At the same time, investors await clues on monetary policy as central bankers gather in Jackson Hole, Wyo., for their annual meeting on Friday.

Elsewhere, the Brazilian real fell to the weakest against the dollar in twoand-half years ahead of the nation’s most uncertain election in more than 30 years. Turkey’s lira edged higher after two days of declines; the country’s markets are closed for most of this week. Futures in crude oil and industrial metals climbed, as emerging-market stocks and currencies advanced.