US stocks have climbed, led by gains in technology stocks on optimism for progress in US-China trade talks and signs of a likely reprieve for Chinese telecom company Huawei.
Despite losing some of its initial steam, the S&P 500 still managed to close at a record high after the US and China agreed on Saturday to resume trade talks.
US President Donald Trump also offered concessions including no new tariffs and an easing of restrictions on Huawei Technologies, while China agreed to make unspecified new purchases of US farm products.
Still, stocks had given up a good portion of their earlier gains on Monday as investors contemplated whether the US Federal Reserve would be as dovish as has been anticipated recently, and caution crept back in for what is likely to be a lightly traded week due to the July 4 holiday.
Willie Delwiche, investment strategist at Robert W Baird in Milwaukee, said trade optimism has shifted the outlook on future interest rate cuts.
“There was celebration on the open and it was a case where if some of this trade uncertainty goes away, even if it is not solved, so to speak, that decreases the likelihood the Fed needs to step in, or at least step in as aggressively as people were thinking about a week and a half ago,” he said.
Tech stocks, Wall Street’s top performers so far in 2019, jumped 1.45 per cent on Monday, with heavyweight Apple’s 1.83 per cent gain providing the biggest boost.
Chipmakers with a sizeable revenue exposure to China jumped nearly 5 per cent at their session high before also pulling back, last showing a 2.65 per cent gain in the Philadelphia Semiconductor index. Huawei supplier Micron Technology gained 3.9 per cent.
The Dow Jones Industrial Average rose 117.47 points, or 0.44 per cent, to 26,717.43, the S&P 500 gained 22.57 points, or 0.77 per cent, to 2964.33 and the Nasdaq Composite added 84.92 points, or 1.06 per cent, to 8091.16.
Stocks saw their steepest sell-off this year in May, a 6.6 per cent decline, after a breakdown in the US-China trade talks sparked concerns of a global economic slowdown.
But hopes that the Federal Reserve would cut interest rates to preserve a strong run of US economic growth, and a dovish turn by central banks around the globe, helped the S&P 500 and the Dow Jones indexes post their best June performance in decades.
Despite the latest development in talks, traders still anticipate the Fed’s next move will be a rate cut of at least a quarter of a percentage point at its July 30-31 policy meeting.
Data showed growth in manufacturing cooled in the US in June while factory activity shrank across much of Europe and Asia, further supporting expectations of a rate cut.
Gains on the Dow were held in check by a 2.1 per cent drop in Boeing after a report that federal prosecutors had subpoenaed records relating to the production of the 787 Dreamliner in South Carolina.
Wynn Resorts jumped 5.9 per cent, the most on the S&P, as gambling revenue in the Chinese territory of Macau rose more than expected in June. Shares of peers Melco Resorts & Entertainment and Las Vegas Sands also rose.
Coty tumbled 13.5 per cent, falling the most on the S&P, after the company said it would overhaul its operations and write down about $US3 billion in value of its brands acquired from Procter & Gamble.
Advancing issues outnumbered declining ones on the NYSE by a 1.57-to-1 ratio; on Nasdaq, a 1.5-to-1 ratio favoured advancers.
The S&P 500 posted 62 new 52-week highs and two new lows; the Nasdaq Composite recorded 122 new highs and 31 new lows.
About 7.04 billion shares changed hands in US exchanges, compared with the 7.15 billion daily average over the last 20 sessions.