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Dec. 13, 2019, 4:25 p.m. EST

S&P 500, Nasdaq eke out new records in wake of U.S.-China trade pact

Trump says new tariffs on China due Sunday won’t take effect

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By Chris Matthews, MarketWatch


AFP via Getty Images
A Chinese and US national flag hang on a fence at an international school in Beijing on December 6, 2018.

U.S. stocks closed slightly higher Friday, though well off intraday peaks, after President Donald Trump and Chinese officials announced a trade pact that includes a rollback of some tariffs, the scrapping of further duties originally set for Sunday, and promises of targeted U.S. agricultural purchases by China.

How did the benchmarks perform?

The Dow Jones Industrial Average  /zigman2/quotes/210598065/realtime DJIA -0.16% rose 3.33 points, or less than 0.1% to 28,135.38, after hitting a high at 28,290.73, while the S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.10%   gained 0.23 points or 0.01% to 3,168.80, eking out a new record close, and the Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.87%  added 17.56 points, or 0.2%, to 8,734.88, also a record.

At session highs, the Dow had risen 158.68 points, or 0.6%, the S&P gained more than 14 points, or 0.4% and the Nasdaq gained 52 points, or 0.6%, with all three benchmarks setting new intraday highs.

For the week, the Dow gained 0.4%, while the S&P added 0.7% and the Nasdaq advanced 0.9%,

What drove the market?

A “skinny” trade deal was announced by China and the U.S., but doubts about the details kept stocks, which mostly hit records on Thursday, in check.

China held a news conference in Beijing announcing an agreement on U.S.-China trade and said it would increase purchases of U.S. agricultural products and was offer new intellectual property protections in return for a reduction in U.S. tariffs.

More U.S. import duties that were planned to start from Sunday on more than $150 million in annual consumer goods “won’t be charged because of the fact we made the deal,” President Trump the president said. I n separate comments, Trump said China would most likely buy $50 billion of farm goods.

“The United States and China have reached an historic and enforceable agreement on a Phase One trade deal that requires structural reforms and other changes to China’s economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange,” according to a statement by the U.S. Trade Representative .

The statement said that the U.S. “will be maintaining 25 percent tariffs on approximately $250 billion of Chinese imports, along with 7.5 percent tariffs on approximately $120 billion of Chinese imports.” suggesting that tariffs of 15% implemented on Sept. 1 will be cut in half. The president said a so-called phase-two deal will be discussed immediately rather than after the 2020 presidential election.

Chinese officials said the U.S. would remove more tariffs in stages, though no details were given. U.S. Trade Rep. Robert Lighthizer said that the actual text of the deal will be signed sometime in January, and the reduction of levies won’t take effect until 30 days after that, CNBC reported .

Lighthizer told reporters at the White House, that China will boost U.S. agricultural purchases by $32 billion from previous levels over a two-year period, bringing annual purchases by Beijing to $40 billion annually, with an eye toward $50 billion annually, the Wall Street Journal reported .

Some market strategists, however, expressed some concern that the agreement wasn’t substantial enough to support further stock buying after Thursday’s burst higher, following the initial reports.

“The deal isn’t as robust as some in the market hopes for, so it’s completely reasonable for the market to pull back and take some profits,” Randy Frederick, vice president of trading and derivatives at Charles Schwab told MarketWatch. “The market had already been pricing in the Dec. 15 tariffs getting removed.”

/zigman2/quotes/210598065/realtime
US : Dow Jones Global
27,930.78
-46.06 -0.16%
Volume: 140.70M
Aug. 13, 2020 11:20a
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/zigman2/quotes/210599714/realtime
US : S&P US
3,383.71
+3.36 +0.10%
Volume: 659.38M
Aug. 13, 2020 11:20a
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/zigman2/quotes/210598365/realtime
US : U.S.: Nasdaq
11,108.38
+96.14 +0.87%
Volume: 1.26M
Aug. 13, 2020 11:20a
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