US equities rallied to record highs overnight on Wall Street amid optimism over a US-China “phase one” deal.

The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average hit all-time closing highs after China said that it will tighten intellectual property rules, a move designed to help boost the chances of a trade deal between the two largest economies. 

Markets have been keeping a close eye on developments surrounding a much-anticipated “phase one” trade deal ahead of December 15th – when further tariffs on Chinese exports to the US are expected to go into effect.

The S&P 500 hit 3,133.64, a rise of 0.8%, while Nasdaq Composite reached 8,632.49, an increase of 1.3%. Both indexes also landed intraday records.

The Dow Jones Industrial Average also had a good day, hitting a record close & increase of 0.5% hitting 28,066.47.

In the S&P 500, tech was the best-performing, rising 1.4%, while Nvidia led the sector even higher with a 4.9% gain. 

Dow was led higher with Intel’s gain of 2.1%. Amazon closed 1.6% higher and Apple shares helped to push the Nasdaq higher by 1.8%.

These gains came after the market’s rally came to a halt last week, with the S&P 500 snapping a six-week winning streak.

This year, the S&P 500 is up by 25%, making it an exceptional year, and is headed for its biggest one-year gain since 2013.

President Donald Trump said he was “very close” to a trade pact with China, which helped the S&P 500 Index advance. 

Yung-Yu Ma, Chief Investment Strategist at BMO Wealth Management, said:

Markets are relatively optimistic about a phase one trade deal happening, but obviously there’s more uncertainty until President Trump and President Xi sit down and sign something more formal.

Expect USD volatility tomorrow, as US consumer spending data is released, along with GDP, jobless claims and durable goods. 

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