U.S. stocks markets closed sharply higher on Monday as investors’ confidence enhanced buoyed by phase-one trade deal between the United States and China. Moreover, better-than-expected economic data for these countries also strengthened market participants’ sentiments. All three major stock indexes recorded fresh closing highs.
The Dow Jones Industrial Average (DJI) gained 0.4% or 100.51 points to close at 28,235.89. The S&P 500 increased 0.7% to close at 3,191.45. Meanwhile, the Nasdaq Composite Index closed at 8,814.23, advancing 0.9%. The fear-gauge CBOE Volatility Index (VIX) decreased 3.9% to close at 12.14. A total of 7.48 billion shares were traded Monday, higher than the last 20-session average of 6.85 billion. Advancers outnumbered advancers on the NYSE 2.39-to-1 ratio. On Nasdaq, a 1.65-to-1 ratio favored advancing issues.
How Did The Benchmarks Perform?
The Dow closed in positive territory with 24 components of the 30-stock blue-chip index closing in the green while 6 ended in red. Within the Dow, Cabot Oil & Gas Corp. (NYSE:COG) with a Zacks Rank of #3 (Hold) surged 4.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The tech-laden Nasdaq Composite also ended in the positive territory due to strong performance of large-cap tech stocks. The S&P 500 also finished in the green. The Utilities Select Sector SPDR (XLU), Energy Select Sector SPDR (XLE (NYSE:XLE)), Health Care Select Sector SPDR (XLV) and Communication Services Select Sector SPDR (XLC) gained 1.3%, 1.3%, 1.1% and 1%, respectively. Notably, 10 out of 11 sectors of the benchmark index closed in the green while one finished in the red.
U.S-China Phase-One Trade Deal
On Dec 13, both United States and China declared that they have reached a phase-one trade deal to resolve more than a year-long trade dispute and tariff war. Per the deal, the United States will reduce tariff rate from 15% to 7.5% on $120 billion Chinses exports. Moreover, the Trump administration will also cancel imposition of 15% tariff on fresh $160 billion Chinese products mainly used for making consumer goods.
On the other hand, China has pledged to purchase $40 billion agricultural products from the United States per year. U.S. officials are still trying to raise the threshold to $50 billion per annum. Moreover, China will also rollback on some tariffs imposed on U.S. exports. U.S. Trade Representative Robert Lighthizer said the deal will address intellectual-property issues along with strong enforcement provisions and financial services and currency issues.
Solid Economic Data
The National Association of Home Builders’ monthly confidence index increased five points to 76 in December from an upwardly-revised 71 in November. December’s figure represents the highest index reading since June 1999. Any reading above 50 indicates improved confidence among homebuilders.
The IHS Markit Flash U.S. Composite PMI Output Index grew to 52.2 in December from 52 in November. The December index was highest in 5 months. Services Business Activity Index was 52.2 in December compared with 51.6 in the prior month. U.S. Manufacturing PMI was 52.5 in December compared with 52.6 in November.
The National Bureau of Statistics of China reported that the country’s value-added industrial output grew 6.2% year over year in November compared with 4.7% in October. Moreover, China’s retail sales jumped 8% year over year in November compared with 7.2% in October.
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