Stocks climbed toward fresh records on Monday as investors focused on a report that China will cut import tariffs for frozen pork, pharmaceuticals and some high-tech components starting from Jan. 1. Investors were also eyeing developments at Boeing, after the Dow component announced that president CEO Dennis Muilenburg has resigned amid a controversy surrounding its 737 MAX jet.
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How are benchmarks performing?
The Dow Jones Industrial Average DJIA, +0.40% rose 103 points, or 0.4%, at 28,5558, with gains from Boeing Co. delivering the biggest tailwind to the index. The S&P 500 index SPX, +0.15% advanced 4 points, or 0.1%, at 3,226, while the Nasdaq Composite Index COMP, +0.19% climbed 13 points, or 0.1%, at 8,938.
The S&P and Nasdaq both hit new intraday highs Monday morning.
Last week, the Dow booked a 1.1% weekly gain, the S&P 500 index returned 1.7% over the period, while the Nasdaq Composite Index climbed 2.2%, marking its largest weekly gain since Aug. 30., according to FactSet data. All three benchmarks produced a second consecutive weekly advance and a trio of all-time closing highs.
Year-to-date the Dow is up 22.3%, the S&P 500 up 28.7% and the Nasdaq up 34.8%,
What’s driving the market?
The Dow was getting a boost from Boeing Co. BA, +2.64% shares, which rose 2.1% Monday morning on the news that Dennis Muilenburg was resigning from the aircraft maker effective immediately. Chief Financial Officer Greg Smith will serve as interim CEO “while Mr. Calhoun exits his non-Boeing commitments,” according to a statement from the company. Current Chairman David L. Calhoun, will be come president and CEO effective Jan. 13.
The Dow component has significantly underperformed the S&P 500 year-to-date, up just 1.7% versus the large-cap indexes nearly 29% rise, amid the world-wide grounding of tits 737 MAX airliner, following the crashes of two of these planes in October of last year and on March 10.
Boeing shares were contributing about 47 points to the Dow’s advance at the start of trade Monday.
Wall Street’s main stock indexes had been set to gain as the U.S. and China attempt to show signs of cementing a partial trade agreement that could set the stage for a more improved business climate in 2020.
Thus far, China’s cabinet has agreed to lower tariffs for all trading partners on more than 859 types of products to below the rates that most-favored nations enjoy, the Finance Ministry said Monday, according to the Wall Street Journal.
The Journal reported that the lowered import duties will apply to frozen pork, as China aims to shore up its meat supplies amid an outbreak of swine fever. Tariffs on some of the products will go to zero.
Bloomberg News es timates that the total imports impacted could be $389 billion, or about 18% of China’s total imports, based on 2018 import data.
The move is the latest in a sign that Beijing and Washington are near completing a partial trade agreement that would achieve a lasting detente in a tariff conflict that has persisted for almost two years and has impeded global and domestic economic expansion, economists say.
“The move by China appears to be partly driven by a domestic shortage, and partly by a desire to build bridges with the US,” David Madden, market analyst at CMC Markets wrote in a Monday note to clients.
“Either way it is a step in the right direction for the trading relationship of the two largest economies in the world. As it is Christmas week, market volatility is low, and trading ranges are small, so it is possible today’s movements are not a true reflection of market sentiment,” the CMC analysts wrote.
Trade for Monday kicks off a shortened week of action, with Tuesday representing a half-day session and most global markets closed on Wednesday for Christmas.
Investors were parsing data on orders for long-lasting goods in November, which fell 2%, the largest decline since May, driven by a 72.7% decline in orders for defense aircraft and parts. Economists polled by MarketWatch expected a 1% increase. Orders for core capital-expenditure goods, a key measure of business investment, rose 0.1%.
New home sales in November were at an annual rate of 719,000, a 1.3% increase from the revised October rate of 710,000, but below the 740, expected by economists, according to a MarketWatch poll.
What stocks are in focus?
Shares of Apache Corp. APA, +12.56% rallied 11.1% early Monday, after the oil-and gas explorer announced an agreement with French company Total SA FP, +0.50% to acquire a 50% working interest in Block 58 of the offshore Guyana-Suriname basin.
Aurora Cannabis Inc. ACB, -8.44% announced over the weekend that Chief Corporate Officer Cam Battley has left the company. Shares were down 9.8%.
Online gambling company DraftKings Inc. said Monday it will become a public company via an acquisition of Diamond Eagle Acquisition Corp. DEAC, +5.21% and SBTech, a gaming technologies firm. The deal is expected to close in the first half of 2020, when the combined company will trade under a new symbol, listed on the Nasdaq. Diamond Eagle shares rose 5.2% early Monday.
How are other markets trading?
The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, -0.18% was edging lower, down 1 basis point at 1.905%.
Oil prices were slightly lower; West Texas Intermediate Crude for February delivery CLG20, -0.38% ticked down 16 cents, or less than 0.1% at $60.28 a barrel on the New York Mercantile Exchange. Gold prices were also edging higher, with the price of an ounce of gold GCG20, +0.47% rising $5, or 0.3%, to $1485.80.
The U.S. dollar DXY, -0.05% was edging higher relative to a basket of its rivals, with the ICE Dollar index, a measure of the buck against six rival currencies, edging less than 0.1% higher.
In Asia overnight, stocks closed mixed; with the China CSI 300 000300, -1.25% losing 1.3%, Japan’s Nikkei 225 NIK, +0.02% gaining less than 0.1% and Hong Kong’s Hang Seng HSI, +0.13% rising 0.1%.
European stocks were trading mixed Monday, with the Stoxx Europe 600 SXXP, -0.03% down less than 0.1%.
