Hope for China trade talks boosts stocks

NEW YORK — Industrial and technology companies led stocks to solid gains Monday after the U.S. and China appeared to make significant progress in trade talks. That helped ease concerns among investors that the world's two biggest economies might be headed for a trade war.

After another round of talks, the two countries agreed not to place tariffs on goods imported from the other. The Chinese government said it will buy more U.S. goods, including energy and agricultural products, while Treasury Secretary Steven Mnuchin said the U.S. postponed its proposal to put tariffs on up to $150 billion in goods from China. The two sides gave no indication of how much progress they had made toward ending their dispute entirely and both said hostilities could increase again.

Mark Hackett, chief of investment research at Nationwide Investment Management, said investors overreacted to the possibility of a trade war and they may be slowly learning to take a more patient approach with statements by President Donald Trump’s administration and other nations, which is a good thing, Hackett says, because future administrations may borrow from Trump's aggressive style.

“Treating Trump literally is destructive for investors,” he said. “There's a lot of these issues where there are going to be hyperbolic statements made in the public sphere by both sides.”

Trade disputes have occupied a lot of investors' attention for the last two months. Stocks have rallied on signs progress was being made, only to fall back when the situation appeared to worsen. Hackett said Wall Street could get over its trade worries relatively quickly if talks go well.

If that happens, he said stocks could be set for further gains because they are still below their early 2018 highs and analysts expect stronger earnings growth, which makes stock prices seem less expensive.

General Electric rose 1.9 percent to $15.26 after announcing that its train engine division will combine with railroad equipment maker Westinghouse Air Brake Technologies in deal worth $11.1 billion. It's the latest step by GE's CEO, John Flannery, to break off parts of the conglomerate. GE will get $2.9 billion in cash and will own 50.1 percent of the combined company, and the deal will help it narrow its business down to the aviation, health care and energy industries.

Chipmakers rallied after Micron Technology raised its profit and revenue forecasts for the fiscal third quarter. Micron jumped 3.9 percent to $55.48 while Intel picked up 1.5 percent to $54.32 and Lam Research added 2.2 percent to $199.87.

That contributed to a broad rally in technology stocks.