Wall Street rallies after Trump calls off Mexico tariffs

Traders work on the floor at the New York Stock Exchange June 6, 2019. — Reuters pic
Traders work on the floor at the New York Stock Exchange June 6, 2019. — Reuters pic

JUNE 10 — Wall Street’s main indexes climbed today, as investors were relieved after the United States abandoned its plans to impose tariffs on Mexican goods.

Mexico on Friday agreed to step up efforts to stem the flow of illegal Central American migrants, following threats from US President Donald Trump to impose a 5 per cent import tariffs on all Mexican goods starting today.

“Both the US economy and the Mexican economy would have been worse off had the tariffs been imposed,” said David Kass, professor of finance at the University of Maryland.

“Investors are also optimistic today in the hope that the trade war with China will also be resolved in the near future,” Kass said.

US automakers, which have long built vehicles in Mexico, traded higher, with General Motors Co gaining 2.4 per cent and Ford Motor Co 1.1 per cent. Corona beer maker Constellation Brands , which has significant Mexico exposure, was up 2.4 per cent.

Technology stocks rose 1.5 per cent and provided the biggest boost among the nine major S&P sectors trading higher.

Large-cap companies, including Apple Inc, Microsoft Corp, Amazon.com and JPMorgan Chase, rose between 2 per cent and 3.5 per cent and bolstered the markets.

However, shares of United Technologies Corp and Raytheon Co came under pressure after Trump said he was a “little concerned” about their merger as it could take away competition in the sector.

The two companies yesterday agreed to merge to create a new firm worth about US$121 billion. United Technologies Corp was down 2.3 per cent, while Raytheon Co was up 2.1 per cent.

At 10.24am ET, the Dow Jones Industrial Average was up 165.45 points, or 0.64 per cent, at 26,149.39. The S&P 500 was up 21.58 points, or 0.75 per cent, at 2,894.92 and the Nasdaq Composite was up 112.88 points, or 1.46 per cent, at 7,854.98.

Only the defensive utilities and real estate sectors were trading lower.

Other gainers included chemical marker LyondellBasell Industries, which rose 5.9 per cent following a 37 million share buyback program today.

Kraft Heinz Co gained 5.3 per cent after the packaged food company said the numbers it restated last month were accurate following completion of an internal investigation.

Salesforce.com Inc slid 4.5 per cent, the most among S&P companies, after the cloud-based services provider said it would buy big data firm Tableau Software for US$15.3 billion. Tableau jumped 34.7 per cent.

Advancing issues outnumbered decliners by a 2.28-to-1 ratio on the NYSE and by a 2.74-to-1 ratio on the Nasdaq.

The S&P index recorded 51 new 52-week highs and no new low, while the Nasdaq recorded 74 new highs and 21 new lows. — Reuters

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