The S&P 500 and Nasdaq clinched fresh closing records Monday, as investors awaited the planned signing of a “phase one” U.S.-China trade deal later in the week and prepared for fourth-quarter earnings season to move into full swing.
How did the major indexes end?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.88% rose 83.28 points, or 0.3%, to end at 28,907, its second-highest close on record, according to Dow Jones Market Data.
The S&P 500 /zigman2/quotes/210599714/realtime SPX -1.12% advanced 22.78 points, or 0.7%, to close at 3,288.13, while the Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP -1.07% gained 95.07 points, or 1%, to end at 9,273.93 — record finishes for both indexes.
Stocks on Friday gave back some ground, but saw weekly gains. The Dow on Friday briefly traded above the 29,000 milestone for the first time but ended the day down 133.13 points, or 0.5%, at 28,823.77. That left the blue-chip gauge with a weekly rise of 0.7%.
The S&P 500 fell 9.35 points, or 0.3%, on Friday to end at 3,265.35, trimming its weekly rise to 0.9%. The Nasdaq Composite lost 24.57 points, or 0.3%, to finish at 9,178.86, leaving it with a weekly advance of 1.8%.
What drove the market?
Stocks added to modest early gains after news reports indicated that the U.S. plans to withdraw its largely symbolic designation of China as a currency manipulator ahead of Wednesday’s planned signing of a partial trade pact that aims to ease the tariff battle between the world’s two-largest trading partners.
China’s chief trade negotiator, Vice Premier Liu He, and a delegation are slated Wednesday to sign the so-called “phase one” trade deal in Washington. The Wall Street Journal reported that the U.S. and China are also set Wednesday to announce plans for semiannual talks aimed at pushing reforms in both nations and resolving disputes.
“It looks like there’s going to be some kind of ‘phase one’ deal,” Arun Bharath, chief investment strategist at Bel Air Investment Advisors, told MarketWatch. “It may not be a full resolution, but a step in the right direction.”
But Bharath also credited liquidity provided from global central banks as a catalyst propelling equities higher globally. “That’s a great environment for risk-on investments, which are primarily being driven by a surge of global liquidity driven by central banks.”
Potentially tempering expectations for further trade progress was an article overnight in the South China Morning Post , which cited “a social media account linked to the Chinese government” that posted a cautionary note Monday on the state of U.S.-China trade relations.
“We must bear in mind that the trade war is not over yet — the U.S. hasn’t revoked all its tariffs on China and China is still implementing its retaliatory measures,” according to Taoran Notes, a social media account affiliated with the official Chinese publication Economic Daily. “There are still many uncertainties down the road,” the post read.
Investors also are waiting for the world’s largest investment banks to kick off corporate earnings season starting Tuesday.
“Financials come first. They are the backbone of the economy,” said Diane Jaffee, senior portfolio manager at TCW, in an interview with MarketWatch.