Stock benchmarks eked out fresh all-time highs on Monday, notching slight gains as progress toward a so-called phase-one U.S.-China trade agreement remained elusive.
How are the major benchmarks doing?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.44% closed 31.33 points, 0.1%, higher at 28,036.22, while the S&P 500 index /zigman2/quotes/210599714/realtime SPX +1.05% edged up 1.57 points to 3,122.03, a gain of 0.05%. The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.66% added 9.11 points, or about 0.1%, to end at 8,549.94.
What’s driving the market?
U.S.-China trade talks remain a key driver for U.S. equities, with last week’s records supported by rising optimism that a limited, phase-one trade deal will soon be struck.
Stock-index futures were trading higher early Monday after Chinese state media outlet Xinhua said Chinese Vice Premier Liu He, the country’s top trade negotiator, held a phone conversation with U.S. Trade Rep. Robert Lighthizer and Treasury Secretary Steven Mnuchin on Saturday, describing the discussions as “constructive.”
Futures markets reversed those gains in the hour before the start of trade after news reports cast doubts on Beijing’s optimism toward a deal:
“We had been up in the premarket overnight, and the market turning lower goes to show that investors should take trade optimism with a grain of salt,” Lindsey Bell, chief investment strategist with Ally Invest, told MarketWatch.
“The situation is very fluid, and with the market at all-time highs, that gives President Trump more confidence to take a hard line with China,” Bell said. “Over the past year-and-a -half, when the market reaches a new peak, trade is usually what causes us to take a leg down.”
The Trump administration on Monday issued a 90-day extension of a license allowing U.S. companies to continue doing business with Chinese telecom giant Huawei Technologies Co. Huawei was added to a federal list of restricted entities earlier the year, which are suspected of working against U.S. national security interests. Its status has been seen as a key issue in trade negotiations.
Meanwhile, China’s central bank on Monday lowered the interest rate on its regular reverse repurchase open market operations for the first time since October 2015 in an effort to boost market confidence and buoy slowing growth.
Analysts said they were also keeping an eye on Hong Kong, as protests continued and police stormed a university campus after an all-night siege.
There was little on the economic calendar Monday. The National Association of Home Builders said its index of builder confidence edged one point lower in November, but remained near the highest level for 2019.