US stocks rose on Monday and gains in industrials helped propel the Dow to a more than two-month closing high, after a truce between the United States and China calmed fears that a trade war might be imminent.
US Treasury Secretary Steven Mnuchin's comments over the weekend that the two countries had put the prospect of a trade war “on hold” and agreed to hold more talks to boost US exports to China boosted stocks at the opening, with the Dow Jones Industrial Average leading the charge higher.
Mnuchin had said on Sunday the United States and China had agreed to drop their tariff threats, and China had on Monday praised a significant dialling back of tensions.
“The big news over the weekend was that a trade war was averted, and so we had an adjustment, covering bets that there would be negative news coming out of the discussion,” said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama. “We're seeing companies that do more of their business on an international basis do well.”
The S&P industrial sector advanced 1.5 per cent. Boeing Co , which sells about a fourth of its commercial aircraft to Chinese customers, jumped 3.6 per cent. It was the biggest percentage gainer on the Dow and lifted the blue-chip index. The Russell 2000 rose 0.7 per cent to hit a record closing high for a fourth straight session, though the index of small-cap companies underperformed large caps.
The Dow Jones Industrial Average rose 298.2 points, or 1.21 per cent, to 25,013.29, the S&P 500 gained 20.04 points, or 0.74 per cent, to 2,733.01, and the Nasdaq Composite added 39.70 points, or 0.54 per cent, to 7,394.04.
General Electric advanced 1.9 per cent. It had confirmed on Monday it will merge its transportation business with rail equipment maker Wabtec , which jumped about 3.5 per cent. Not all US business leaders welcomed the trade war truce, with some cautioning that Washington would find it tough to rebuild momentum to address what they see as troubling Chinese policies.
Shares of AK Steel fell 5.1 per cent and US Steel was down 3.8 per cent following the weekend trade announcement. Micron Technology Inc rose 3.9 per cent, the most on the S&P, after the chipmaker lifted its current-quarter forecast.
The easing of the trade dispute also boosted chipmakers, whose major clients include Chinese firms, with the Philadelphia chip index gaining 1.1 per cent. Technology sector rose 0.8 per cent. Tesla jumped 2.8 per cent on pricing of the Model 3's fully loaded version and after brokerage Berenberg raised its already bullish price target.
Regional lender MB Financial jumped 12.9 per cent after agreeing to be bought for $4.87 billion by Fifth Third Bancorp , which fell 7.9 per cent.
Advancing issues outnumbered declining ones on the NYSE by a 2.43-to-1 ratio; on Nasdaq, a 1.59-to-1 ratio favoured advancers. The S&P 500 posted 33 new 52-week highs and three new lows; the Nasdaq Composite recorded 171 new highs and 33 new lows.
About 5.8 billion shares changed hands on US exchanges. That compares with the 6.6 billion daily average for the past 20 trading days, according to Thomson Reuters data.