U.S. stocks climb on news that trade war with Mexico is averted

Technology companies and banks helped power stocks higher on Wall Street on Monday as investors welcomed news that the United States and Mexico averted a trade war and potentially damaging tariffs.

The latest gains extend the market’s winning streak to a fifth day. That follows stocks’ strongest week since November. The market has had a marked turnaround after escalating trade tensions fueled a turbulent skid in May.

Some of those trade jitters eased a bit Monday, at least in regard to the U.S.-Mexico trade spat. President Trump suspended plans to impose tariffs on Mexican goods after the countries struck a deal on immigration. The dispute had threatened to raise costs for U.S. companies and consumers and expand a global trade war that already includes China.

Trump claims victory, but the U.S.-Mexico pact is a compromise, and tentative »

During an interview with CNBC, Trump said Monday that he expects to meet with Chinese President Xi Jinping at the Group of 20 summit in Japan this month. That may have given investors some cause for optimism about a resolution for the U.S.-China trade war, though Trump said an additional wave of U.S. tariffs on Chinese goods will go into effect if the Xi doesn’t meet with him at the summit.

“Relief in trade tensions, in terms of Mexico, and hope for relief in trade tensions with China seem to be helping the market today,” said Willie Delwiche, investment strategist at Baird.

The Standard & Poor’s 500 index rose 13.39 points, or 0.5%, to 2,886.73. The benchmark index rose 4.4% last week, its best weekly performance of 2019. It’s now about 2% below the record high it set April 30.

The Dow Jones industrial average rose 78.74 points, or 0.3%, to 26,062.68. The Nasdaq composite climbed 81.07 points, or 1.1%, to 7,823.17. The Russell 2000 index of smaller companies advanced 9.17 points, or 0.6%, to 1,523.56.

The latest gains build on the market’s momentum from last week, when a lackluster U.S. jobs report appeared to increase the odds that the Federal Reserve will cut interest rates in coming months. Last week, Federal Reserve Chairman Jerome H. Powell held out the possibility that the central bank will soon cut interest rates to protect the economic recovery from any damage resulting from the Trump administration’s multiple trade disputes. Many analysts think the Fed will cut rates more than once before year’s end, perhaps beginning in July.

“We have essentially, over five trading days, undone the preceding 19 days’ worth of weakness,” Delwiche noted.

Other market indicators still signal that investors are worried about the potential for an economic slowdown, however.

The yield on the 10-year Treasury note remains sharply lower from where it was at the beginning of May, before the Trump administration’s tariff threats escalated trade conflicts with China and Mexico. Those threats spooked investors, triggering a monthlong sell-off that derailed the market’s strong start to the year.

“If you look beyond the S&P 500, it’s not nearly as rosy a picture,” Delwiche said. “You don’t want to make too much of what we’ve seen over the past week. It’s been encouraging, but it’s by no means an all-clear, everything-is-OK signal.”

On Monday, news of the U.S.-Mexico deal helped lift shares of automakers and consumer-related companies that would suffer from new tariffs on goods from Mexico. Ford rose 0.6%. General Motors gained 1.5%. Constellation Brands, which makes Corona beer, rose 1.9%.

Technology companies accounted for much of the market rally. Apple rose 1.3%. Chipmakers made some of the biggest moves, with Nvidia adding 2% and Qualcomm rising 2.7%.

Banks were also among the biggest gainers as lower bond prices pushed yields higher. The yield on the 10-year Treasury note rose to 2.14% from 2.08%. Higher yields mean banks can make bigger profits from loans. Bank of America shares rose 2% and Citigroup advanced 2.2%.

Consumer-related and internet stocks also gained ground as investors shifted into high-growth holdings and away from utilities and other safer-play sectors. Amazon climbed 3.1%. Facebook added 0.8%.

Utilities, real estate and consumer staples lagged behind other sectors.

Traders also cheered a couple of multibillion-dollar deals, including a merger of Raytheon and United Technologies that would create one of the world’s largest defense contractors. Raytheon shares rose 0.7%. United Technologies slid 3.1%.

Investors bid up shares in Tableau 33.7% after customer-management software developer Salesforce said it would buy the company in an all-stock deal valued at $15.7 billion. Salesforce fell 5.3%.

Energy futures finished mostly lower. Benchmark U.S. crude slid 1.4% to settle at $53.26 a barrel. Brent crude oil, the international standard, fell 1.6% to $62.29 a barrel.

Wholesale gasoline fell 0.5% to $1.73 a gallon. Heating oil fell 1% to $1.81 a gallon. Natural gas rose 0.9% to $2.36 per 1,000 cubic feet.

Gold fell 1.2% to $1,329.30 an ounce. Silver slid 2.6% to $14.64 an ounce. Copper rose 1.3% to $2.66 a pound.

The dollar rose to 108.44 yen from 108.15 yen. The euro weakened to $1.1315 from $1.1338.