Stocks were on course to finish solidly higher in late-afternoon trading on Wall Street Monday after the U.S. and China agreed to a 90-day truce in their escalating trade dispute.
The broad rally, which lost some of its early morning momentum, followed gains in overseas markets as investors welcomed news of the temporary stand-down, which was agreed to over dinner between President Donald Trump and his Chinese counterpart Xi Jinping at the G-20 summit over the weekend.
The long-running dispute between the world’s two largest economies has rattled investors for months, stoking traders’ fears that it could begin dragging down corporate profits and weighing on global economic growth.
“We’re going to have to see what happens over these 90 days,” said Tom Martin, senior portfolio manager at Globalt Investments. “In the meantime, you’re not getting an increase in the tariffs, so that’s an interim positive.”
The encouraging development on trade helped extend a swift turnaround for the market, which notched its biggest weekly gain in nearly seven years last week after Fed Chairman Jerome Powell indicated the central bank might consider a pause in rate hikes next year while it gauges the impact of its credit tightening program.
Technology stocks, automakers, retailers and industrial companies accounted for much of the market’s gains Monday, offsetting losses in household goods makers and utilities. Energy stocks also climbed as U.S. crude oil prices rose sharply.
U.S. traders observed a moment of silence before markets opened Monday in honor of former President George H.W. Bush, who died Friday at 94. The New York Stock Exchange and Nasdaq said they will close trading Wednesday in observance of a national day of mourning for Bush. The federal government will also be closed.
The S&P 500 index climbed 27 points, or 1 percent, to 2,788 as of 3:15 p.m. Eastern Time. The benchmark index vaulted a 4.9 percent gain last week. The Dow Jones Industrial Average jumped 281 points, or 1.1 percent, to 25,819. The average was up as much as 441 points earlier.
The Nasdaq composite rose 97 points, or 1.3 percent, to 7,428. The Russell 2000 index of smaller-company stocks picked up 9 points, or 0.6 percent, to 1,542.
Markets in Europe also climbed. Germany’s DAX gained 1.8 percent, while France’s CAC 40 rose 1 percent. Britain’s FTSE 100 added 1.2 percent.
After a steep decline in October, stocks steadied in early November. But the selling picked up again as investors abandoned high-flying technology stocks amid concerns over the U.S.-China trade tussle and slowing global economic growth and bailed on energy stocks as the price of oil plummeted.
Presidents Trump and Xi of China met at the G-20 summit over the weekend and agreed to a cease-fire, lasting for at least 90 days, to allow time to smooth out a dispute over Chinese technology policies that the U.S. and other trading partners consider predatory.