U.S. stocks closed higher for a third session Monday as a pair of billion-dollar deals reaffirmed confidence that the U.S. economy continues its steady expansion. Optimism that progress would be made toward resolving contentious trade disputes between the U.S. and China also bolstered sentiment.
How did the main indexes fare?
The Dow Jones Industrial Average DJIA, +0.35% added 89.37 points, or 0.4%, to finish at 25,758.69, with Nike Inc. NKE, +3.05% rising 3.1% to hit a 52-week high.
The S&P 500 index SPX, +0.24% climbed 6.92 points, or 0.2%, to 2,857.05, led by materials and energy sectors.
The Nasdaq Composite Index COMP, +0.06% reversed earlier losses to advance 4.68 points to 7,821.01.
U.S. equities rose sharply last week, on hopes for improving trade relations, as well as signs of stabilization in Turkey’s currency market. The Dow jumped 1.4%, a move that took it to its highest close since February. The S&P 500 added 0.6% and is within 1% of its record. The Nasdaq dipped 0.3% over the course of last week, but it is also within striking distance of its record.
What factors were driving the market?
PepsiCo Inc. plans to buy SodaStream International Ltd. for $3.2 billion and Tyson Foods will buy Keystone Foods for $2.16 billion in cash.
Stocks remained buoyed following a report by The Wall Street Journal on Friday that negotiators from the U.S. and China were mapping out talks with the aim of resolving the trade dispute by November. Such an outcome would remove a huge overhang of uncertainty over the markets. The news spurred big gains in Asian markets.
However, this week will also see the imposition of 25% tariffs on $16 billion worth of Chinese imports, an action by the Trump administration that China has said it would retaliate against.
Stocks trimmed gains just ahead of the closing bell, after Reuters reported that President Donald Trump, in an interview, escalated his criticism of Fed Chairman Jerome Powell and higher interest rates. Bloomberg had previously reported that Trump had criticized Powell for higher rates in remarks to donors at a fundraiser.
Investors are also paying close attention to troubled regions like Turkey, where the lira and stock market have tumbled amid high inflation, political instability, and debt, and Italy, which is struggling under a debt burden of its own.
Looking ahead, Wednesday will see the release of minutes from the Federal Reserve’s most recent meeting, which could provide insight into the central bank’s thinking in terms of policy changes.
What were market experts saying?
“I believe stocks are being helped by a halo from the strong earnings season,” Kristina Hooper, Chief global market strategist at Invesco, told MarketWatch via email.
“However, I think the major catalyst for the stock market movement upward is relief that the U.S. and China are headed for another round of trade talks. Investors have shown again and again this year that they want to believe the tariff wars will subside rather than intensify, so be prepared for some downside volatility if they fail,” she said. “And I do believe they will fail,” Hooper cautioned.
“It turns out Turkey was a turkey of a trade. U.S. markets rallied as rumblings of China coming to the U.S. table to talk trade. Turkey managed to look bit better by the end of [last] week too. The economic data remains decent if only a bit below expectations and the S&P 500 is once again knocking on all-time highs,” said Paul Nolte, portfolio manager at Kingsview Asset Management LLC, in a note. “The path of least resistance now is higher, but as we have seen, news flow is important.”
What stocks were in focus?
PepsiCo PEP, -0.10% slipped 0.1% and shares of SodaStream SODA, -0.46% jumped 9.4% after the soft drink and snack food giant said it would buy SodaStream at an 11% premium over Friday’s closing p[rice.
Tyson TSN, +1.60% added 1.6% in the wake of the announcement of its deal with Keystone Foods.
Tesla Inc. TSLA, +1.48% reversed earlier losses to rise 1%. JPMorgan had slashed its price target on the electric-car company, dropping it to $195 from $308, arguing it was unlikely the company would be taken private, as Chief Executive Officer Elon Musk recently—and unexpectedly—tweeted that he was attempting to do.
Meanwhile, some of the company’s suppliers are reportedly starting to worry about the auto maker’s financial health after Model 3 production sapped its cash hoard, according to The Wall Street Journal.
Estée Lauder Cos. EL, +3.40% shares rose 3.4% after the cosmetic firm reported adjusted fourth-quarter earnings that beat expectations, as it also reported revenue that grew more than had been forecast.
Lannett Co. Inc. LCI, -60.37% plummeted 60% after it said its distribution agreement with Jerome Stevens Pharma wouldn’t be renewed. It also gave a fourth-quarter outlook that was below expectations.
U.S.-listed shares of Roche Holding AG RHHBY, +1.38% gained 1.4% after its Alecensa cancer drug was granted marketing authorization in China.
ConocoPhillips COP, +1.07% shares rose 1.1% after the energy company reached a $2 billion settlement with Venezuelan state-owned oil giant PdVSA on an arbitral tribunal convened under the rules of the International Chamber of Commerce.
