Market’s China rally fades late in the day
The major U.S. stock indexes eked out small gains Monday after a late afternoon pullback weighed on small-company shares.
The market had been broadly higher earlier in the day amid hopes that trade tensions were easing between the U.S. and China. But much of that rally faded, leaving decliners on the New York Stock Exchange outnumbering risers.
Gains by health care and energy stocks outweighed losses in real estate companies and other decliners. Casino operators and equipment companies got a boost from a Supreme Court decision that cleared the way for states to legalize sports betting.
The indexes got off to a strong start Monday, as investors hoped for reduced trade tensions between the U.S. and China after President Donald Trump tweeted over the weekend that he would help Chinese telecommunications company ZTE get “back into business.”
ZTE's Hong Kong-traded shares have been suspended since U.S. authorities banned it last month for seven years from importing U.S. components in a case involving illegal exports to North Korea and Iran. But Trump said too many jobs in China are at stake after the U.S. government sanctions cut off access to ZTE's American suppliers.
China's foreign ministry responded by saying it “highly commended” the move, ahead of trade talks in Washington this week.
Fears of retaliatory tariffs and other trade disruptions roiled the market earlier this spring before the latest raft of company earnings captured investors' focus. The president's tweet about ZTE may be a sign that U.S.-China trade negotiations are relatively constructive, if not friendly, said Brian Nick, chief investment strategist at Nuveen Asset Management.
Qualcomm and NXP Semiconductors also got a boost as investors banked that Chinese regulators will reverse their stance and approve Qualcomm's proposed $44 billion acquisition of NXP. China is the final major government withholding approval of the deal, but Bloomberg News reported that Chinese regulators are reviewing the deal again.
Casino operators and equipment makers surged after the Supreme Court struck down a federal law that barred gambling on football, basketball and other sporting events in most states. The 6-3 decision gives states the go-ahead to legalize sports betting.
Viacom tumbled 4.9 percent to $28.74 after CBS sued its controlling shareholder, seeking to block efforts to make the company combine with Viacom. CBS added 2.2 percent to $53.65.
Xerox slid 4.3 percent to $28.87 after the copier maker ended merger talks with Fujifilm and resolved a dispute with investors Carl Icahn and Darwin Deason.