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S&P 500 hits all-time high as U.S.-China trade truce spurs optimism

S&P 500 hits all-time high as U.S.-China trade truce spurs optimism
Trader Jonathan Muller works in his booth on the floor of the New York Stock Exchange on Monday. (Richard Drew / Associated Press)

Wall Street kicked off July with a record high for the S&P 500 index after a cease-fire in the U.S. trade war with China put investors in a buying mood.

The S&P 500 index rose 22.57, or 0.8%, to 2,964.33. The milestone marks the second time in less than two weeks that the benchmark index closed at a record high. The index is now up 18.3% for the year.

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The Dow Jones industrial average gained 117.47 points, or 0.4%, to 26,717.43. The Dow had been up 290 points. The Nasdaq composite rose 84.92 points, or 1.1%, to 8,091.16.

The broad rally came after the world's two biggest economies agreed over the weekend to resume negotiations. The truce, which involves the U.S. holding off on imposing new tariffs on $300 billion in Chinese goods, gave financial markets reason to breathe a little easier.

The new tariffs would have come on top of existing tariffs that remain in place. Investors have been worried the fallout from the tariffs could hurt global economic growth and corporate profits. Those concerns prompted the Federal Reserve last month to declare its willingness to cut interest rates if the dispute hurts the U.S. economy.

Wall Street's gains in the first half of the year were marked by months of volatile trading as investors rode the ups and downs of the trade war. That volatility is unlikely to fade as the U.S. and China head into yet another round of trade talks.

The key difference this time around is the Federal Reserve. In December, the Fed spooked investors by raising interest rates for the seventh time in two years. Now, the central bank has said it is willing to cut rates in order to shore up the U.S. economy if the trade war crimps growth in what is now the longest economic expansion in U.S. history.

Technology stocks and banks accounted for much of the gains Monday as traders turned their backs on more defensive holdings, pushing bond and gold prices lower. Utilities and real estate stocks lagged the market in another sign that Wall Street had a bigger appetite for risk.

Chipmakers rallied on plans by the U.S. to loosen some restrictions on sales to Huawei. Broadcom climbed 4.3% and Micron Technology gained 3.9%.

Among financial services companies, Bank of America rose 1.4% and JPMorgan Chase gained 1.7%. Consumer product makers and other consumer companies also rose. Many of those companies, including Nike, have much to gain or lose in the ongoing trade dispute.

Bond prices fell. The yield on the 10-year Treasury note rose to 2.03% from 2% late Friday.

Rising oil prices gave energy sector stocks a modest boost after OPEC agreed to extend current production levels for nine months. The oil cartel faces weakening demand as global economic growth slows. The current deal to cut production is meant to help reduce oversupply and push prices higher. Baker Hughes gained 2.2% and ConocoPhillips added 2.1%.

Benchmark crude oil rose 62 cents to settle at $59.09 a barrel. Brent crude, the international standard, added 32 cents to close at $65.06 a barrel.

Gold fell $24.40 to $1,389.30 per ounce and silver slid 15 cents to $15.19 per ounce.

The dollar rose to 108.46 Japanese yen from 107.78 yen on Friday. The euro weakened to $1.1286 from $1.1378.

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