Wall Street rallies as trade war fears ease
US stocks rallied on Monday as fears of a global trade war ebbed with investors betting that US President Donald Trump would back down on his threat to impose hefty tariffs on steel and aluminum imports. Strategists also cited rising oil prices and ebbing concerns after an Italian election for a relief rally in the three major US equity indexes.
NEW YORK — US stocks rallied on Monday as fears of a global trade war ebbed with investors betting that US President Donald Trump would back down on his threat to impose hefty tariffs on steel and aluminum imports.
Strategists also cited rising oil prices and ebbing concerns after an Italian election for a relief rally in the three major US equity indexes.
Investors started to regard Mr. Trump’s threat as a negotiating tool after he tweeted that Canada and Mexico could avoid his proposed tariffs if they ceded ground in the North American Free Trade Agreement ( NAFTA) talks.
A lack of specific retaliatory measures from other countries was also reassuring, said Mona Mahajan, US investment strategist, Allianz Global Investors in New York. “It felt like (Trump) revealed some of his cards with that Twitter comment. I don’t think it’s a coincidence that came out as the latest round of NAFTA talks were concluding,” said Ms. Mahajan. “Hopefully this becomes a non-event and we’re back to focusing on the economy and rates.”
Mr. Trump’s announcement last week of a plan to slap import tariffs of 25% on steel and 10% on aluminum caused the S&P to fall as much as 2% on Thursday.
Art Hogan, chief market strategist at B. Riley FBR in New York, said the administration “sees the stock market as a report card for success and markets have so far said this trade war is not a good idea.”
The Dow Jones Industrial Average rose 336.7 points or 1.37% to 24,874.76; the S&P 500 gained 29.69 points or 1.10% to 2,720.94; and the Nasdaq Composite added 72.84 points, or 1%, to 7,330.71.
Investors were also watching the aftermath of Italy’s election which registered a strong showing for anti-establishment parties though with no group able to form a stable government.
“The fact we didn’t get riots in the street or a call for a Brexittype move reassured people,” Allianz’s Mr. Mahajan said.
All 11 S&P sectors rose, and the biggest drivers were information technology, which rose 0.90% and the financial sector, which gained 1.4%. Facebook, Amazon, Netflix and JPMorgan provided the biggest boosts from single stocks.
The energy sector ended up 1.1% as oil prices rose on forecasts for robust oil demand growth and concerns output from Organization of Petroleum Exporting Countries producers would grow at a slower pace in coming years.
Utilities were the biggest percentage gainer with a 1.95% increase followed by the financial sector’s 1.4% gain.
Advancing issues outnumbered declining ones on the NYSE by 2.82 to one; on Nasdaq, a 2.20-to-1 ratio favored advancers. The S&P 500 posted 12 new 52-week highs and four new lows; the Nasdaq Composite recorded 113 new highs and 20 new lows. Volume on US exchanges was 6.91 billion shares, compared to the 8.3 billion average over the last 20 trading days. —