US stocks marched higher in afternoon trading after President Donald Trump agreed to hold off on raising tariffs on Chinese imports, citing progress in trade talks between the two nations.
Stocks marched higher on Wall Street Monday after President Donald Trump agreed to hold off on raising tariffs on Chinese goods, which would have escalated a damaging trade war between the world’s two largest economies.
Investors had been growing increasingly optimistic over the last two weeks that the U.S. and China were moving closer to a resolution of their dispute. The fight is over U.S. complaints that Beijing steals technology or pressures companies to hand it over.
Banks and technology stocks accounted for much of the gains, while consumer goods and utility companies lagged the overall market.
China faced a March 2 deadline when the U.S. would have increased punitive duties on $200 billion worth of Chinese imports. Trump did not set a new deadline. He said there had been “productive talks” on some of the more difficult issues and he’s willing to meet with Chinese President Xi Jinping if negotiations progress.
The trade war and its hefty tariffs have already raised costs for businesses and consumers. Any additional escalation could shake investor confidence as an economic slowdown looms over China and Europe.
Elsewhere, oil prices fell after Trump said they were getting too high. On Friday, oil closed at the highest level since mid-November.
Industrial giant General Electric rose after it announced plans to sell a biotech unit. Spark Therapeutics doubled after pharmaceutical giant Roche offered to buy the gene therapy developer. Goldman Sachs Group gained 2 percent as banks led stocks higher.
The gains come as investors have a full schedule of economic and corporate news to consider this week.
Macy’s and other retailers will report their latest financial results this week. The Commerce Department will release fourth-quarter gross domestic product figures on Thursday, and Federal Reserve Chairman Jerome Powell is scheduled to give two days of Congressional testimony this week.
KEEPING SCORE: The Dow Jones Industrial average rose 136 points, or 0.5 percent, to 26,168 as of 2:06 p.m. Eastern time. The S&P 500 index added 0.4 percent and the Nasdaq composite gained 0.6 percent.
Progress in the U.S.-China trade talks helped lift markets broadly in Europe and Asia, where China’s main index, the Shanghai Composite, jumped to an eight-month high.
ANALYST’S TAKE: “I feel like we’re in a position where the president is interested in making deals,” said Jamie Cox, managing partner at Harris Financial Group.
The U.S. election cycle is just around the corner, giving the president an incentive to pursue deals and keep the economy and markets stable, he said. Even so, markets may be too optimistic about what’s possible in any China deal, as negotiations over intellectual property concerns will likely take more time.
Investors need to remain cautious, Cox said, citing soft economic data, including the surprise drop in retail sales in December.
“This is sort of an economic opportunity for investors to rebalance, to get a little less aggressive in their portfolios,” he said.
GE SHEDS WEIGHT: General Electric is selling its biopharma business to Danaher for $21.4 billion. The sale is yet another step down in size for GE. The stock surged 8.4 percent.
GE has been divesting businesses since getting hurt in the financial crisis a decade ago. It slashed its dividend in October and ousted CEO John Flannery. It also plans to downsize its Boston headquarters.
SPARKS: Shares in Spark Therapeutics more than doubled after pharmaceutical giant Roche offered to by the gene therapy company for about $4.8 billion.
Roche is snapping up the company as its rivals also look to gene therapy as a way to build up their potential drug pipelines. The focus is treatment for rare diseases, which often involves very costly drugs.
DRESSED FOR SUCCESS: Carter’s Inc. jumped 8 percent after the maker of children’s clothing reported strong profit growth in the fourth quarter and forecast further gains in 2019.
REMEMBER THIS: Western Digital climbed 3.7 percent after the data storage company announced a new flash memory card capable of holding up to a terabyte of information.
ENERGY: Trump criticized the rising price of oil in an early morning tweet, sending prices lower. U.S. crude lost 3.1 percent to $55.49 per barrel in New York. Prices are up 23 percent so far this year. On Friday, oil closed at $57.26 a barrel, the highest level since November 12, when it closed at $59.93.
Brent crude, used to price international oils, fell 1.8 percent to $65.92 per barrel in London.