U.S. stocks climb to record on trade momentum
U.S. equities climbed toward a new high, and European stocks reached a record, amid hopes that a partial trade deal between America and China will ease a key risk for investors heading into year-end. Treasuries fell.
With tech and health-care leading the charge, the S&P 500 index gained in the wake of the agreement announced Dec. 13 that will see Washington reduce tariffs and Beijing increase purchases of American farm goods, although many details are still to be ironed out. In another positive sign, the Federal Reserve Bank of New York's survey measure of general business conditions in the next six months jumped to a five-month high. The dollar retreated.
The Stoxx Europe 600 became the latest major equity gauge to hit a new peak as it jumped for a fourth day, led by gains in financial and industrial shares. Stocks were mixed in Asia. Equities in Shanghai rose after Chinese data showed industrial output and retail sales both exceeded expectations.
The pound strengthened, though it trimmed gains after U.K. factories posted the weakest performance in more than seven years. European bonds mostly edged higher.
The announcement of the preliminary U.S.-China deal staved off a scheduled Dec. 15 tariff hike, a prospect that had loomed large for markets. It remains unclear how China will follow through on pledges to boost American agricultural imports, and how quickly the U.S. promise to roll back half of a September tariff hike will happen.
"Now that the 'good news' is here, what is next for stocks? This week should be the last week with any decent volume as investors head for home for Christmas and the New Year's holiday," Paul Nolte, a portfolio manager at Kingsview Asset Management in Chicago, wrote to clients. "Slow volume should also mean modest moves in stocks, so investors should be able to sleep easy and dream of sugar plum fairies to close out a very good year."
China's threat of retaliation against Germany if it excludes Huawei Technologies Co. as a supplier of 5G wireless equipment shows tensions remain high elsewhere.
Elsewhere, oil held near a three-month high and gold was steady. Turkey's lira dropped the most in almost two months as President Recep Tayyip Erdogan warned of retaliation over potential U.S. sanctions.
Here are some key events to watch for this week:
- Policy decisions are due Thursday from the Bank of Japan and the Bank of England.
- Federal Reserve district bank presidents including Robert Kaplan of Dallas, Eric Rosengren of Boston and John Williams of New York are scheduled to speak this week.
- Revised U.S. GDP data are due Friday.
- Friday brings quadruple witching in the U.S., the simultaneous expiration date of stock index futures, stock index options, stock options and single stock futures. Expect elevated trading volume, particularly in the last hour of trading.
