Stocks hit record highs on Monday and were on pace for its fourth straight gain as a so-called phase one trade deal between China and the U.S. clears the path higher for stocks to end a banner year.
The Dow Jones Industrial Average traded 200 points higher, or 0.7%. The S&P 500 gained 0.8% while the Nasdaq Composite jumped 1%.
Tech shares hit a record as the sector surged more than 1%as Micron Technology traded 4.2% higher. Western Digital was the best-performing tech stock, gaining 6.8%. Goldman Sachs propelled the Dow to an all-time high, rising 2.2%.
Sentiment was also lifted by strong economic data out of China. Chinese industrial production rose 6.2% in November on a year-over-year basis, topping expectations. Retail sales in China also jumped 8% last month.
The U.S. and China announced Friday they will move forward with a so-called phase one trade deal. As part of the agreement, the U.S. will roll back some levies on Chinese products and China will increase its purchases of U.S. agricultural products. Treasury Secretary Steven Mnuchin said will be inked in January.
Stocks posted solid gains last week in anticipation of the agreement. News of the deal comes after a record-setting rally from mid-October throughout November. It is also the latest market headwind that is at least temporarily resolved.
Traders work on the floor of the New York Stock Exchange.
Lucas Jackson | Reuters
Last week, the Federal Reserve indicated it will keep rates at current levels through 2020. In the U.K., Prime Minister Boris Johnson’s Conservative Party secured a massive parliamentary victory, giving momentum to the country’s divorce plans from the European Union.
However, some caution remains as details on key aspects of the trade deal, such as agricultural purchases and the U.S. trade deficit, remain unclear. U.S. Trade Representative Robert Lighthizer has, however, assured that the deal is “totally done.”
“I know the American farmer is happy that they’re going to get back their previously largest customer,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. “But, getting to the numbers that the administration is hoping for in the next year will be tough.”
Monday’s gains were kept in check by a 2.8% drop in Boeing. Shares of the aerospace giant fell after The Wall Street Journal reported Sunday the company was nearing a decision on possibly halting or cutting production of the 737 Max.
The report follows Federal Aviation Administration chief Steve Dickson telling CNBC last week the 737 Max jet’s return was unlikely to be cleared until 2020. “There are a number of processes, milestones, that have to be completed,” Dickson said. “If you just do the math, it’s going to extend into 2020.”
On the data front, the National Association of Home Builders/Wells Fargo Housing Market Index rose in December to its highest level in 20 years. Meanwhile, data from IHS Markit showed U.S. business activity hit a five-month high in December.
