Stocks rose again Monday, led by gains in retailers and smaller companies after a report showed that service-sector companies — where most Americans work — had strong December orders. Investors were also encouraged by the resumption of trade talks between the United States and China.
That helped stocks build on the huge gains they made Friday. The U.S. economy has been a top concern for investors over the last three months, and the strong report on service companies showed that banks, healthcare firms and construction companies were holding up well. Bond prices fell.
Dollar stores and other retailers, clothing companies and automakers climbed. Amazon surpassed Microsoft to become the most valuable publicly traded company.
The two-day gain followed a huge pullback last Thursday, when a weak report on manufacturing helped send large multinational companies sharply lower.
“The portion of the economy that's domestically focused is doing better than the portion that is exporting, and arguably that is coming from the trade winds and the tensions we see from that,” said Jason Pride, chief investment officer of private clients at Glenmede.
The Standard & Poor’s 500 index rose 17.75 points, or 0.7%, to 2,549.69 — its highest in more than three weeks. The index, a benchmark for many mutual funds, has risen 8.4% since Dec. 24, though it's still 13% below the record high it reached in late September.
The Dow Jones industrial average rose 98.19 points, or 0.4%, to 23,531.35. The tech-heavy Nasdaq composite climbed 84.61 points, or 1.3%, to 6,823.47.
Smaller companies, which tend to be more closely linked to how well the U.S. economy is doing, did far better than the rest of the market. The Russell 2000 jumped 24.62 points, or 1.8%, to 1,405.37.
Trading has been rough over the last two weeks, but stocks have risen as investors hoped that the United States and China will finally make progress in trade talks. But Wall Street is fearful that the trade war is far from a resolution. The two nations placed tariffs last year on billions of dollars' worth of each other's exports, and those taxes are likely to rise in March unless there's progress in negotiations.
Reports of the latest round of trade discussions contributed to the market's big rally Friday.
“This is the biggest wild card, because you don't know exactly how these parties are going to reach an agreement,” Pride said. “Just keeping the tariffs that have been announced so far and not going ahead with new ones would be a positive surprise for the market.”
Amazon rose 3.4% to $1,629.51, bringing its value to $796.8 billion, compared with $783.6 billion for Microsoft.
Dollar Tree rose 5.5% to $97.96 after activist investment firm Starboard Value disclosed a stake in the discount retailer and urged it to consider selling the Family Dollar chain it bought in 2015. Starboard nominated seven candidates for seats on Dollar Tree's board of directors.
Target advanced 4.9% to $69.68.
The parent company of Pacific Gas & Electric plunged 22.3% to $18.95 after Reuters reported that the company might file for bankruptcy protection as it faces potentially huge liabilities connected to deadly wildfires in California in 2017 and 2018. PG&E has fallen sharply — it traded at almost $70 a share in October 2017 and about $48 in November 2018.
In the second big pharmaceutical deal of 2019, Eli Lilly plans to buy Loxo Oncology for about $8 billion as it bulks up on cancer treatments that target gene abnormalities. Loxo soared 66.3% to $232.65 after the announcement, and Lilly edged up 0.5% to $115.28. On Thursday, Bristol-Myers Squibb agreed to buy Celgene for $74 billion, one of the largest drug industry acquisitions of all time.
Shares of the companies that run stock exchanges fell after a group of nine banks, brokers and other companies said they are planning to launch a new exchange. The companies said their Members Exchange will reduce costs and simplify trading. Nasdaq fell 2.6% to $79.81 and Intercontinental Exchange, the parent company of the New York Stock Exchange, fell 3% to $73.38.
Mattel jumped 7.7% to $11.21 after the toy company said it has gained the rights to make dolls of the South Korean pop band BTS. Last year BTS became the first K-pop group to reach the top slot on the Billboard Top 200. The licensing agreement also covers collectible figures and games.
NuVasive slid 9.2% to $45.45 after the San Diego maker of spinal devices said equipment sales were delayed in the fourth quarter and surgical procedures slowed.
Bond prices fell. The yield on the 10-year Treasury note rose to 2.69% from 2.65%.
Oil prices continued their recent rally. U.S. crude rose 1.2% to $48.52 a barrel. After sinking to an 18-month low of $42.53 a barrel Dec. 24, the price of U.S. crude has risen seven of the last eight trading days. Brent crude, used to price international oils, rose 0.5% to $57.33 a barrel.
Wholesale gasoline fell 0.5% to $1.34 a gallon. Heating oil rose 0.5% to $1.78 a gallon. Natural gas sank 3.3% to $2.94 per 1,000 cubic feet.
Gold rose 0.3% to $1,289.90 an ounce. Silver slipped 0.2% to $15.76 an ounce. Copper fell 0.4% to $2.64 a pound.