NEW YORK, Oct 22 — The benchmark S&P 500 stock index rose within striking distance of a record high yesterday as further signs of progress toward a resolution of the trade dispute between the United States and China helped boost shares in trade-exposed and economically sensitive sectors.
US President Donald Trump continued to strike optimistic tones yesterday, while White House adviser Larry Kudlow said US tariffs on Chinese goods scheduled for December could be withdrawn if talks go well.
“It is a bit more confirmation from China as to what was agreed with the US in discussions towards the stage one trade deal,” said Jon Adams, investment strategist at BMO Global Asset Management.
Trade-sensitive technology stocks, which rose 1 per cent, added the most gains to the S&P 500. Shares of semiconductor companies, which derive much of their revenue from China, especially climbed. The Phialdelphia SE Semiconductor Index advanced 1.6 per cent.
The economically sensitive energy and financial sectors led percentage gains on the S&P 500. Energy shares gained 1.8 per cent while financials rose 1.4 per cent.
Along with the subsiding of trade tensions, the steepening US Treasury yield curve as well as better-than-expected corporate earnings thus far have benefited stocks, said Mona Mahajan, US investment strategist at Allianz Global Investors in New York. In Monday’s trading, the S&P 500 rose above the 3000 level to come within 0.7 per cent of its record closing high.
“We’re watching for a breakout to the upside of that range,” she said. “Thus far, the early signs we’re seeing are favorable.”
However, losses in shares of Boeing Co capped gains in the Dow Jones Industrial Average. Boeing shares shed 4.2 per cent as several brokerages downgraded their ratings on the stock following reports that call into question the timing of the 737 MAX jet’s return to service.
The Dow Jones Industrial Average rose 38.09 points, or 0.14 per cent, to 26,808.29, the S&P 500 gained 18.61 points, or 0.62 per cent, to 3,004.81 and the Nasdaq Composite added 68.01 points, or 0.84 per cent, to 8,157.55.
The earnings lineup for this week includes high-profile companies such as Boeing, Microsoft Corp, Procter & Gamble Co, United Parcel Service Inc and Caterpillar Inc.
According to data from Refinitiv, analysts have projected the first earnings contraction since 2016 for S&P 500 companies. But of the 75 companies that have reported results so far, only 12 per cent have come in below estimates.
Halliburton Co shares gained 5.4 per cent after the oilfield services provider detailed plans of further cost reductions.
Coty Inc shares surged 13.6 per cent after the cosmetics maker said it was planning to sell its professional beauty business that houses brands such as Wella and OPI.
US-listed shares of Teva Pharmaceutical Industries Ltd jumped 8.1 per cent after the company announced it had made progress toward settling remaining opioid-related litigation.
Advancing issues outnumbered declining ones on the NYSE by a 2.07-to-1 ratio; on Nasdaq, a 2.29-to-1 ratio favored advancers.
The S&P 500 posted 39 new 52-week highs and two new lows; the Nasdaq Composite recorded 89 new highs and 56 new lows. — Reuters