Dow climbs 670 points on signs of easing trade tension
The stock market surged back from the biggest weekly rout in two years, with major benchmarks rocketing more than 2.7% on signs that an escalation of trade tensions was beginning to ease.
Chipmakers and banks led gains as the S&P 500 grew 70.29 points, or 2.72%, marking its biggest one-day jump since August 2015, while 20 stocks climbed for every one that fell. The Dow climbed 669.4 points, or 2.84%, erasing Friday’s 400-point drop. The gauge still had a ways to go to make up all of last week’s losses.
Facebook was a noticeable underperformer, ending just slightly higher after the Federal Trade Commission said it has an open, non-public probe into the company’s privacy practices.
The optimism toward U.S. stocks emerged after the limits of the Trump administration’s willingness to embrace protectionism came into view over the weekend. Treasury Secretary Steven Mnuchin told Fox News that he’s “cautiously hopeful” that China will reach a deal to avoid tariffs on $50 billion of U.S. exports, while European leaders demanded a permanent exclusion at the threat of retaliation and a deal was struck with South Korea.
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The Trump administration tends “to negotiate to a more reasonable position, or more toward the center, as time goes on,” Maggie Gage, the head of Washington research at Credit Suisse Securities, said in an interview on Bloomberg Television. “We’re cautiously optimistic that that will apply here too with the Chinese tariffs.”
Microsoft’s 7.6% surge was the biggest contributor to the S&P 500’s advance, followed by the 4.8% gain in Apple. Gains in financial shares were led by Comerica and Metlife.
Elsewhere, 10-year Treasury yields edged higher ahead of major debt sales. The dollar dropped to a one-month low and European shares slid for a fourth day as investors remain on edge over the region’s growth prospects. Brent crude traded near $70 a barrel on lingering tension in the Middle East. A measure of U.S. corporate junk bonds rose the most in a month.