U.S. stocks climbed solidly higher Monday, after President Donald Trump tweeted that he would delay China tariffs, and that there had been “substantial progress” in trade talks over the weekend.
How are stock indexes faring?
The Dow Jones Industrial Average DJIA, +0.73% rose 144 points, or 0.6%, to 26,176, while the S&P 500 index SPX, +0.64% gained 13 points, or 0.5%, to 2,806. The Nasdaq Composite Index COMP, +0.91% added 53 points, or 0.7%, to 7,581.
Read: It is the best start for the stock market in 32 years by one measure — so why is Wall Street so uneasy?
What’s driving the market?
Trade headlines dominated the action to start the week, with global equities climbing after Trump tweeted late Sunday that he would extend a deadline for increasing tariffs on China imports, scheduled for March 1. He cited “substantial progress” across key topics such as intellectual property, technology transfers, agriculture and currency, and said if that continues, he will meet with President Xi Jinping at Mar-a-Lago to wrap up a deal.
Opinion: History suggests you should buy the dip if stocks falter at this level
The comments came after U.S. and Chinese negotiators held talks through the weekend in a bid to resolve a long-running trade war. China stocks were poised for their strongest one-day session since mid-2015. Still, state-owned Xinhua News Agency said in an opinion commentary that the latest round of talks show “there are still some differences that need more time to be ironed out.”
I am pleased to report that the U.S. has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues. As a result of these very......
— Donald J. Trump (@realDonaldTrump) February 24, 2019
Optimism was further boosted by reports that President Trump told a gathering of state governors Monday morning that there would be soon be a “signing ceremony” for the trade deal, underscoring perceptions that the president is eager to reach a deal in the coming weeks.
What economic data and Fed speakers are in focus?
A busy week for data will include many figures delayed by the partial government shutdown, but investors will zero in on fourth-quarter gross domestic product data, expected to confirm signs that the economy slowed late in 2018.
The Chicago Fed national activity index declined in January to a negative 0.4, falling from a downward-revised, positive reading of 0.5 in December. A negative reading indicates the economy is growing at a below-trend rate.
Wholesale inventories in the U.S. rose 1.1% in December, according to a Census Bureau estimate that was delayed due to the government shutdown.
Federal Reserve Vice Chairman Richard Clarida, and Fed Bank of Dallas President Robert Kaplan will participate in a “community listen” discussion in Dallas at 11 a.m. The two will also engage in a discussion of national and global economic issues at 6 p.m.
Read: Experts fear a 1960s-style rerun of the Fed letting inflation build up
What are strategists saying?
“We’re seeing progress on geopolitical issues,” Stephen Lee, of Logan Capital Management, told MarketWatch, pointing to reports that suggest the U.S. and China are close to reaching a deal, or at least a truce, on trade concerns.
The removal of the threat of higher tariffs, Lee argued, should be a boon for stock pickers, as market performance will now hinge more on how individual companies are managing the changing global economic landscape and entrenching themselves in fast-growing economies like that of China and India.
“Equities continue to charge higher, as this past week now marks 8 of the past 9 weeks of gains. While sentiment is growing a bit more constructive from its December 2018 pessimistic levels, it’s nowhere near levels of complacency that marked the peak around this time last year back in January 2018, 13 months ago,” wrote Mark Newton, independent adviser at Newton Advisors, in a Monday research report.
What stocks are in focus?
Shares of General Electric GE, +8.85% rallied 8.1% Monday morning, after the industrial conglomerate announced the sale of its biopharama business to Danaher Corp. DHR, +7.98% for $21 billion in cash.
Spark Therapeutics Inc. ONCE, +120.10% stock soared 120.3% after Roche Holding AG ROG, -0.05% said it would buy the biotechnology company in an all-cash deal worth $5.8 billion. Roche will pay $114.50 per Spark share, a premium of 122% to its closing price on Feb. 22.
And shares of Clementia Pharmaceuticals CMTA, +73.93% are up 74.1%, after France’s Ipsen IPN, -5.93% said it would buy the Canada-based drug group in a deal valued at up to $1.31 billion.
Berkshire Hathaway Inc. BRK.A, +1.50% BRK.B, +1.23% shares are in focus after Chairman and Chief Executive Officer Warren Buffett released his investment letter over the weekend. The conglomerate swung to a $25.4 billion loss in the fourth quarter, partly due to an unexpected write-down for Kraft Heinz Co. KHC, -1.20%
Shares of Kraft plunged 27% on Friday, the worst session ever after disappointing earnings and news of a probe by the Securities and Exchange Commission. Kraft may be back in focus on Monday after CNBC reported that the company may consider selling its Maxwell House coffee unit for $3 billion or more, one of potentially several planned divestitures.
Shares of Newmont Mining Corp. NEM, -0.66% were down 1.7% early Monday, after Barrick Gold Corp. ABX, -0.82% said it has made an unsolicited proposal to buy the rival gold miner, in a stock deal that would value Newmont at nearly $18 billion.
Shake Shack Inc. SHAK, -1.21% Etsy Inc. ETSY, +2.12% and Tenet Healthcare Corp. THC, +1.92% will all report after the close of trading on Monday.
How did the major benchmarks fare last week?
On Friday, the Dow rose 181.18 points, or 0.7%, to 26,031.81, finishing above the 26,000 mark for the first time since Nov. 8. The S&P 500 index rose 0.6% to 2,792.67 and the Nasdaq Composite advanced 0.9% to 7,527.54.
The Dow rose 0.6% for its ninth straight week of gains, the longest such run since May 1995, according to the Dow Jones Data Group. The S&P 500 climbed 0.6%, up for a fourth straight week, and the Nasdaq moved up 0.7%, for its ninth weekly gain, its longest since May 2009.
How were other markets trading?
Lifted by trade headlines, the Shanghai Composite Index SHCOMP, +5.60% closed up 5.6% on Monday, its best gain since mid-2015, according to Fact Set Research. Japan’s Nikkei 225 NIK, +0.48% however, shed 0.2%. European stocks were posting more modest gains, with the Stoxx Europe 600 SXXP, +0.33% up 0.2%
In commodity markets, oil prices CLJ9, -3.16% were on the decline, while gold GCJ9, -0.20% was flat and the U.S. dollar DXY, -0.01% slipped less than 0.1%.
Providing critical information for the U.S. trading day. Subscribe to MarketWatch's free Need to Know newsletter. Sign up here.
