U.S. stocks surged at the start of trade Monday, with the S&P 500 setting a new intraday peak, after Washington and Beijing agreed to refrain from escalating their trade dispute, with trade-sensitive tech-related stocks leading the rally.
How are the benchmark indexes faring?
The Dow Jones Industrial Average DJIA, +0.55% jumped 276 points, or 1.1%, to 26,882 and the S&P 500 index SPX, +0.76% rose 35 points, or 1.2%, to 2,977. The Nasdaq Composite COMP, +1.11% surged 138 points, or 1.7%, to 7,830.75.
On Friday, the Dow added 207.06 points, or 0.8%, to 25,532.05. The S&P 500 rose 22.54 points, or 0.8%, to 2,834.41. The Nasdaq Composite Index gained 87.47 points, or 1.1%, to 7,734.49.
The gains come after the Dow logged its best June since 1938 and the S&P 500 rang up its best June since 1955.
What’s driving the market?
After meeting China’s President Xi Jinping on Saturday at the G-20 leaders summit in Japan, President Donald Trump said the U.S. would maintain current tariffs but hold off on new ones. Trump also said he would ease up on a ban on Huawei, allowing U.S. companies to sell their products to the China tech group, though the company will remain on a trade blacklist.
Trump said talks went “even better than expected” and that “we’re going to work with China where we left off.”
Stephen Innes, managing partner at Vanguard Markets wrote in a Sunday note that, “After the markets were stuck in trade-war limbo for the better part of two months, investors will breathe a massive, but exhausted, sigh of relief that both the U.S.-China opted to push the reset button and restart trade negotiation[s],”
Questions remain, however, as to which products U.S. companies will be allowed to sell to Huawei, while investors have been given little information as to the timing of future trade talks and whether or when existing tariffs could be rolled back. The Commerce Department is currently working on a reform of export licensing respecting Huawei, it told the Wall Street Journal.
Data out of China and the global economy was less cheery, with a private gauge showing activity in China’s manufacturing sector cooling in June and moving into contraction territory.
“Economic data…was universally disappointing overnight,” wrote Tom Essay, president of the Sevens Report, in a Monday note to clients. “Every manufacturing PMI missed expectations this morning including those from China, Germany, the EU and Great Britain. All of those PMIs are now below 50, signaling widespread contraction in manufacturing activity.”
The week will be broken up by Thursday’s Independence Day celebrations, but investors will return on Friday to important June nonfarm payroll data. Ahead of that on Monday, the Markit manufacturing purchasing managers index is due at 9:45 a.m. Eastern Time, followed by the Institute for Supply Management’s June index at 10 a.m. Eastern, with construction spending due at the same time.
Read: The economy isn’t on thin ice, but another poor jobs report will amp up the anxiety
What stocks are in focus?
Applied Materials Inc. AMAT, +2.43% shares rose 4.8% Monday, after the chip equipment company said Monday that it will purchase Kokusai Electric for $2.2 billion in cash from private-equity giant KKR & Co. KKR, +1.23%
Semiconductor stocks more generally were rallying early Monday, following the announcement of a trade cease-fire. Shares of Qorvo Inc. QRVO, +5.79% rose 9%, those for Qualcomm Inc. QCOM, +2.17% added 4.4% and Broadcom Inc. AVGO, +3.81% stock advanced 5.1% in premarket trade. The PHLX Semiconductor index SOX, +2.79% rose 4.3%
Shares of Genesee & Wyoming Inc. GWR, +8.71% rallied 8.7%, after the railroads company agreed to be acquired by Brookfield Infrastructure Partners L.P., in a deal valued at $8.4 billion, or 12% above its market value at the close of trade Friday.
Coca-Cola Co. KO, +1.17% announced a decision from the American Arbitration Association that allowed the company to sell a line of energy-drink products, without breaking the terms of a contract with Monster Beverage Corp. MNST, +0.60% Coke shares rose 0.5%, while Monster stock fell 1.3%.
Shares of Coty Inc. COTY, -15.45% fell 0.5% Monday, after the beauty-products company announced a turnaround plan that will add $160 million in extra costs and involve a $3 impairment of its intangible assets.
Dow component Pfizer Inc. PFE, +1.19% announced a successful study of on an eczema treatment product. Its shares rose 0.3% Monday.
Freeport-McMoRan Inc.’s stocks FCX, -4.26% fell 3.6% Monday, after the metals miner lowered its second-quarter outlook given the drop in average copper prices during the quarter.
How are other markets trading?
The yield on the 10-year Treasury note TMUBMUSD10Y, +0.17% rose 0.1 basis point to 2.011%.
Asian markets jumped along with stock futures, while European stocks traded higher, with the Stoxx Europe 600 SXXP, +0.90% rising 0.9%.
The U.S. dollar DXY, +0.52% rose 0.3% to 96.394, while gold prices US:GCM9 sank 1.9%, after scoring the biggest monthly gain in three years.
Oil prices US:CLM9 climbed 2.5% to $59.92 a barrel, after Russia and Saudi Arabia agreed to extend the Organization of the Petroleum Exporting Countries‘s deal to cut oil production by another six to nine months, according to comments by Russian President Vladimir Putin at the G-20 leaders summit in Japan on Saturday.
OPEC plus a group of 10 countries led by Russia will meet Monday and Tuesday in Vienna.
— Barbara Kollmeyer contributed to this article
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