After finishing lower three of the past four weeks, the Dow Jones industrial average rose 1.2 percent Monday as the blue-chip average gained more than 298 points and closed above 25,000 for the first time since mid-March.
Adam Shell of USA Today had the story:
Aircraft maker Boeing and Caterpillar, which makes heavy earth-moving equipment, led the Dow higher with gains of 3.6% and 2.1%, respectively.
Both China and the U.S. agreed to suspend proposed tariffs — including the U.S.’s planned $150 billion of import levies on Chinese imports — as they continue to try to hammer out a deal and reduce tensions.
And while “it’s not even close to a done deal,” according to Don Luskin, chief investment officer at TrendMacro, “it’s now obvious that there is a way forward, and that’s a good thing.”
The temporary reprieve on the trade-war front, however, isn’t the only thing on the minds of investors. Here are some key things Wall Street will be watching this week:
The Dow started the week fractionally lower for the year but turned positive for 2018 with Monday’s rally. The Dow also finished the day above 25,000 level for the first time since March 13. The three other major U.S. stock indexes, the large-company Standard & Poor’s 500, the tech-stock dominated Nasdaq and the small-company Russell 2000, are all solidly in positive territory for the year.
Mark DeCambre and Ryan Vlastelica of MarketWatch.com reported that investors are happy about the lack of a trade war with China:
The mood was upbeat after Treasury Secretary Steven Mnuchin said over the weekend that the Trump administration would delay implementation of tariffs on Chinese goods and “put the trade war on hold” while working out details of a deal between the countries.
Hours later, a conflicting statement was released by U.S. Trade Representative Robert Lighthizer, who said Washington may still resort to tariffs. However, Mnuchin insisted that the administration is unified after agreeing over the weekend not to impose tariffs on China.
At the end of trade negotiations this weekend, China agreed to buy larger amounts of U.S. goods to help narrow the trade deficit between the two economies, but didn’t agree to the specific U.S. target of $200 billion.
Rising borrowing costs and an elevated dollar continue to be watched closely by investors. Last week, the 10-year Treasury note yield logged its biggest climb since April 20. The yield was hovering around 3.06% on Monday, after touching a seven-year intraday high of 3.126% on Friday. Higher yields can make stocks less attractive to investors. Meanwhile, the U.S. dollar, as gauged by the ICE U.S. Dollar Index was trading around a six-month peak.
Fred Imbert and Sam Meredith of CNBC.com reported that futures also rose:
Futures rose sharply on the news as worries of a trade war between the two countries in the world decreased. Trade tensions between the U.S. and China kept a lid on stocks last week, as the major indexes slipped.
“In our view the fundamentals remain attractive for further upside in equities stateside and globally in the months ahead so long as progress persists in trade talks with China,” said John Stoltzfus, chief investment strategist at Oppenheimer Asset Management.
Wall Street also got a boost Monday amid a slew of dealmaking news.
General Electric will merge its transportation business with Wabtec — a rail equipment maker — in a deal worth $11.1 billion. GE shares rose 2 percent.