Tesla soars as stocks climb to an­other record

San Francisco Chronicle - - BUSINESS REPORT - By Alex Veiga

Tech­nol­ogy com­pa­nies led stocks to broad gains on Wall Street Mon­day, driv­ing the S&P 500 and Nas­daq com­pos­ite in­dexes to more record highs — with Palo Alto elec­tric car maker Tesla jump­ing 9.8% to close above $500 for the first time.

Fi­nan­cial, com­mu­ni­ca­tions ser­vices and in­dus­trial stocks also notched solid gains. Health care stocks were the only de­clin­ers. Bond prices fell, send­ing yields higher, and the price of gold fell, signs that in­vestors were fa­vor­ing high­er­risk hold­ings.

The rally, which added to the mar­ket’s gains from last week, came as in­vestors looked ahead to the sign­ing of an ini­tial trade deal with China and the po­ten­tial for fu­ture talks.

The world’s largest economies are ex­pected to sign the “Phase 1” trade agree­ment on Wednes

day. It is be­ing viewed as an open­ing to fu­ture ne­go­ti­a­tions that will deal with more com­pli­cated trade is­sues.

Even a par­tial deal should re­move much of the un­cer­tainty that has weighed on com­pa­nies and in­vestors, at least un­til af­ter the elec­tion, said Scott Lad­ner, chief in­vest­ment of­fi­cer for Hori­zon In­vest­ments in Char­lotte.

“We don’t think the tar­iff over­hang is go­ing to be very rel­e­vant over the next nine months,” Lad­ner said. “Act­ing tough with China and im­pos­ing tar­iffs two years be­fore an elec­tion is a very dif­fer­ent story than do­ing it two months be­fore an elec­tion.”

The Trump ad­min­is­tra­tion also said Mon­day that it is drop­ping its des­ig­na­tion of China as a cur­rency ma­nip­u­la­tor, but their pre­lim­i­nary pact in­cludes a sec­tion that’s in­tended to pre­vent China from ma­nip­u­lat­ing its cur­rency to gain trade ad­van­tages.

The ac­tion comes five months af­ter the Trump ad­min­is­tra­tion had branded China a cur­rency ma­nip­u­la­tor — the first time that any coun­try had been so named since 1994 dur­ing the Clin­ton ad­min­is­tra­tion.

The S&P 500 in­dex rose 22.78 points, or 0.7%, to 3,288.13. The Nas­daq com­pos­ite, which is heav­ily weighted with tech­nol­ogy stocks, climbed 95.07 points, or 1%, to 9,273.93. The S&P and Nas­daq pre­vi­ously set new highs last Thurs­day.

The Dow Jones In­dus­trial Av­er­age gained 83.28 points, or 0.3%, to 28,907.05.

The Rus­sell 2000 in­dex of smaller com­pany stocks picked up 11.96 points, or 0.7%, to 1,669.61.

Across mar­kets, wor­ries about a re­ces­sion have faded since last year as cen­tral banks cut in­ter­est rates and pumped stim­u­lus into the global econ­omy. In ad­di­tion, the prom­ise of a “Phase 1” trade deal be­tween the

U.S. and China has helped lift mar­kets in re­cent weeks, eas­ing in­vestors’ con­cerns of fur­ther es­ca­la­tion in the costly con­flict.

Full de­tails of the pact are due to be re­leased af­ter the agree­ment is signed at the White House on Wed­nes­day.

Chip­mak­ers were among the gain­ers in the tech­nol­ogy sec­tor Mon­day. Nvidia climbed 3.1% and Mi­cron Tech­nol­ogy rose 1.4%. The sec­tor is par­tic­u­larly sen­si­tive to de­vel­op­ments in trade re­la­tions be­cause many of the com­pa­nies rely on China for sales and sup­ply chains. Ap­ple also rose, clos­ing 2.1% higher.

In­dus­trial and com­mu­ni­ca­tion ser­vices com­pa­nies also made solid gains. Gen­eral Elec­tric rose 3.9% and Face­book added 1.8%.

Health care stocks slumped, with in­sur­ance com­pa­nies among the sec­tor’s big­gest de­clin­ers. Cigna fell 3.2%, Unit­ed­Health Group slid 3.1% and An­them dropped 3.6%.

The yield on the 10year Trea­sury rose to 1.85% from 1.82% late Fri­day. The pickup in yields helped lift fi­nan­cial stocks, as it makes it pos­si­ble for banks to charge higher in­ter­est rates on mort­gages and other con­sumer loans. Gold­man Sachs rose 1.3% and Cit­i­group gained 1.8%.

Net­flix climbed 3% as the stream­ing video ser­vice earned two best pic­ture nom­i­na­tions for the 92nd an­nual Academy Awards. Both Martin Scors­ese’s “The Ir­ish­man” and Noah Baum­bach’s “Mar­riage Story” are con­tenders.

Traders bid up shares in Hex­cel 9.6% af­ter the com­pany said it is be­ing bought by ri­val Wood­ward in a deal that will cre­ate one of the largest sup­pli­ers in the aero­space and de­fense in­dus­try. Wood­ward rose 4.8% and will own the ma­jor­ity of the com­bined com­pany when the deal closes.

Ding Ting / As­so­ci­ated Press

Tesla CEO Elon Musk speaks at a de­liv­ery cer­e­mony last week for the Model 3 cars made in Shang­hai. Tesla’s stock soared on Mon­day.

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