Stocks ended Monday’s session at new records amid an upbeat tone tied to a preliminary U.S.-China trade deal struck last week, even while questions remain over the details of the long-awaited “phase-one” accord.
What did the major indexes do?
The Dow Jones Industrial Average DJIA, +0.36% advanced 100.51 points, or 0.4%, to 28,235.89. Despite the travails of Dow constituent Boeing on Monday, the blue-chip index set its first all-time closing high since Nov. 28.
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The S&P 500 SPX, +0.71% rose 22.65 points, or 0.7%, to 3,191.45. The Nasdaq Composite Index COMP, +0.91% jumped 79.35 points, or 0.9%, to 8,814.23, also marking new record closes. All three main benchmarks set new intraday records on Monday.
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What drove the market?
Monday’s ascent for equities was an extension of last week’s optimism after President Donald Trump and Chinese officials announced a so-called phase-one trade pact on Friday that included a partial rollback of some tariffs and the scrapping of further U.S. duties on Chinese imports that were due to take effect on Sunday, while Beijing promising targeted agricultural purchases.
U.S. Trade Representative Robert Lighthizer on Sunday told CBS News that the phase-one China deal was “totally done.” He said the deal goes beyond agriculture to address intellectual-property issues, has strong enforcement provisions and addresses financial services and currency issues. A number of contentious issues remain to be resolved in further “phase-two” talks, which have yet to be scheduled. The deal is expected to be signed in January, he said.
Read: China says it will put off tariff hike on U.S. autos, other goods following trade deal
“The most important thing that happened with the phase-one deal was that we have moved from a one-year-long period of escalation to de-escalation,” said Allan von Mehren, analyst at Danske Bank, in a note. But a lack of detail could serve to temper investor enthusiasm, he said.
It is “unusual” to announce a deal before it has been completed with all legal text that both sides have agreed to, von Mehren said. The lack of text adds to the sense that the announcement of the pact was “not coordinated.”
In economic reports, the Empire State manufacturing index came in at 3.5, slightly higher than November’s 2.9 reading. Meanwhile, the Markit purchasing managers survey for the manufacturing sector was down a touch to 52.5 in December, from 52.6, but the services sector gauge came in at 52.2, from 51.6. Any number above 50 represents a pickup in economic activity.
See: The locomotive of the U.S. economy might be losing steam
What companies were in focus?
Shares of Dow component Boeing Co. BA, -4.29% fell 4.3% on Monday. The Wall Street Journal reported the plane maker is considering either halting or further cutting production of the 737 Max aircraft amid growing uncertainty over the troubled airplane’s return to service.
Shares of PG&E Corp. PCG, -13.97% declined 14% after California Gov. Gavin Newsom demanded changes to the utility’s plan to pay wildfire victims and exit bankruptcy.
FedEx Corp. shares FDX, -0.95% fell 1% on Monday, snapping a four-day win streak, even after J.P. Morgan raised the company’s stock price target to $154 a share from $140 a share.
Health insurer stocks got a boost Monday, after a report in PoliticoPro that lawmakers have reached an agreement to eliminate taxes on expensive employer-provided health plans, medical devices and a health insurance fee. Shares of UnitedHealth Group Inc. UNH, +2.29% rose 2.3%, those for Humana Inc. HUM, +3.61% gained 3.6%, while Cigna Corp.’s CI, +2.77% stock added 2.8% and Anthem Inc. ANTM, +2.70% shares surged 2.7%.
Shares of Intel Corp INTC, -0.16% were also in focus after the chip maker announced it had acquired artificial-intelligence firm Habana Labs for $2 billion to deepen its push into the data-center business. The company’s shares fell 0.2%
Uber Technologies Inc. stock UBER, +5.48% climbed 5.5% after news reports said the ride-hailing app company was in talks to sell its food-delivery business in India to a local competitor.
How did other markets perform?
The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, -0.51% climbed 6.1 basis points to 1.879% as haven demand waned. Bond prices move in the opposite direction of yields.
West Texas Intermediate crude for January delivery CLF22, -0.32% on the New York Mercantile Exchange rose by 14 cents, or 0.2%, to settle at $60.21 a barrel, boosted by positive trade sentiment. As for precious metals, February gold GCG20, -0.09% on Comex fell by 70 cents, or 0.05%, to settle at $1,480.50 an ounce.
The U.S. dollar, as measured by the ICE U.S. Dollar Index DXY, +0.12% , was down 0.1% at 97.03, against a basket of a half-dozen currency peers.
In overseas stock-market bourses, the Stoxx 600 Europe index SXXP, +1.39% climbed 1.4% to end at 417.75, setting a new closing record for the first time in more than four years. China’s CSI 300 benchmark 000300, -0.02% , which comprises equities listed in Shanghai and Shenzhen, closed higher by around 0.5%.