Dow Today – S&P and Dow Follow Global Markets Higher, as Investors Take Heart in Trade Thaw
Shares in technology companies led Wall Street stocks higher on Monday, with global investors buoyed by a thaw in the trade dispute between the United States and China even as prospects for a long-term deal remained uncertain.
The S&P 500 rose 0.8 percent to close at 2,964.33, a record high for the benchmark index. The information technology sector, which includes tech giants like Microsoft and Apple, was the best-performing part of the United States market, rising 1.5 percent. A closely watched index of computer chip companies climbed 2.7 percent. The Nasdaq composite index rose 1.1 percent.
Companies with strong ties to China fared well. Skyworks Solutions, which makes semiconductors used in mobile phones and generates significant revenue in China, jumped 6 percent. Wynn Resorts, which relies heavily on casinos operations in Macau that cater to gamblers from mainland China, rose 5.9 percent. Best Buy, which sells a wide range of products imported from China, rose 3.9 percent.
The tech sector has often been at the center of the economic tug-of-war between Washington and Beijing in recent months. The industry relies on an extensive network of factories in Asia, making it vulnerable to tariffs on Chinese imports.
China is also a major consumer of tech products made by companies like Apple. And the Trump administration’s ban prohibiting American firms from selling technology to the Chinese telecommunications giant Huawei raised the risk that Beijing would retaliate against American tech firms.
On Monday, investors appeared to be shaking off concerns about such risks after President Trump and his Chinese counterpart, Xi Jinping, agreed on Saturday to resume negotiations geared toward resolving a trade war that has spooked markets around the world.
Daily Business Briefing
Mr. Trump also agreed to loosen restrictions on the sale of some American technology to Huawei, as long as it did not have national security implications.
The question for investors now is whether the peace will last and a deal that both sides are happy with can be reached, or if talks will break down again.
The answer is far from clear. The two sides had seemed close to an agreement until talks broke down in May, throwing a shadow over global markets. In comments on Sunday, the Trump administration suggested that wide gaps remained between the two sides.
“Although the agreement will likely partially relieve recent negative sentiment in the financial markets and support near-term growth, it stops short of removing existing tariffs,” said Michael Taylor, chief credit officer for the Asia-Pacific region for Moody’s Investors Service, the ratings firm, in a note to investors. The firm said it continued to believe that the trade war would trim economic growth for both the United States and China.
In part because of a darkening outlook for growth, investors have become increasingly certain that the Federal Reserve will cut interest rates this month, a sense that helped drive a sharp rebound in American markets last month. The S&P 500 rose 6.9 percent in June and is up more than 18 percent this year.
Markets around the world also rose after the weekend meeting between Mr. Trump and Mr. Xi. Prices for crude oil rose. And investors sold government bonds, pushing yields — which move in the opposite direction — slightly higher. The yield on the 10-year Treasury note crept up to 2.03 percent.
In China, the Shanghai Composite Index closed up 2.2 percent on Monday, while the technology-heavy Shenzhen Composite Index closed 3.5 percent higher. Hong Kong markets were closed for a holiday.
Japan’s Nikkei 225 Index gained 2.1 percent. In Taiwan, the Taiex index was up 1.5 percent, while South Korea’s Kospi Index was down slightly.