U.S.-China trade truce sends stocks higher
A welcome truce in the U.S.-China trade dispute put investors in a buying mood Monday, sending U.S. stocks solidly higher and extending the market’s gains from last week.
The broad rally, which lost some of its early morning momentum, followed gains in overseas markets as investors welcomed news of the temporary, 90-day stand-down, which was agreed to over dinner between President Donald Trump and his Chinese counterpart Xi Jinping at the G-20 summit over the weekend.
The long-running dispute between the world’s two largest economies has rattled investors for months, stoking traders’ fears that it could begin dragging down corporate profits and weighing on global economic growth.
“We’re going to have to see what happens over these 90 days,” said Tom Martin, senior portfolio manager at Globalt Investments. “In the meantime, you’re not getting an increase in the tariffs, so that’s an interim positive.”
The encouraging development on trade helped extend a swift turnaround for the market, which notched its biggest weekly gain in nearly seven years last week after Fed Chairman Jerome Powell indicated the central bank might consider a pause in rate hikes next year while it gauges the impact of its credit tightening program.
Technology stocks, automakers, retailers and industrial companies accounted for much of the market’s gains Monday, offset- ting losses in household goods makers. Energy stocks also climbed as U.S. crude oil prices rose sharply.
U.S. traders observed a moment of silence before markets opened Monday in honor of former President George H.W. Bush, who died Friday at 94. The New York Stock Exchange and Nasdaq said they will close trading Wednesday in observance of a national day of mourning for Bush. The federal government will also be closed.
The S&P 500 index climbed 30.20 points, or 1.1 percent, to 2,790.37. The benchmark index vaulted 4.9 percent last week. TheDow Jones Industrial Average jumped 287.97 points, or 1.1 percent, to 25,826.43. The average was up as much as 441 points earlier.
The Nasdaq composite rose 110.98 points, or 1.5 percent, to 7,441.51. The Russell 2000 index of smaller-company stocks picked up 15.69 points, or 1 percent, to 1,548.96.
Markets in Europe also finished higher. Germany’s DAX gained 1.8 percent, while France’s CAC 40 rose 1 percent. Britain’s FTSE 100 added 1.2 percent.
After a steep decline in October, U.S. stocks steadied in early November. But the selling picked up again as investors abandoned high-flying technology stocks amid concerns over the U.S.-China trade tussle and slowing global economic growth and bailed on energy stocks as the price of oil plummeted.
While the U.S-China truce has the potential to steady markets through the end of the year, the countries still need to hammer out a lasting trade deal.
“Three months is not a very long time to achieve this so there are naturally plenty of skeptics out there but this is a rare piece of good news in a conflict that has yet to produce any,” said Craig Erlam, senior market analyst at OANDA.
The trade truce was one of several factors that helped push oil prices higher Monday. Crude prices also jumped on news that Qatar will withdraw from OPEC in January. The move, which marks the first time a Mideast nation has exited the cartel since its founding in 1960, came ahead of an OPEC meeting on Thursday.
A couple of corporate deals also helped move the market Monday.
Tribune Media jumped 11.7 percent to $44.98 after the TV station owner agreed to be acquired by Nexstar Media Group, four months after a bid from Sinclair Broadcast Group collapsed. Nextar shares added 6.9 percent to $88.32.
GlaxoSmithKline PLC slumped 7.8 percent to $38.61 after the drugmaker agreed to acquire Tesaro, which makes the ovarian cancer treatment Zejula. Shares in Tesaro soared 58.5 percent to $73.50.