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Hope for US-China trade progress sends stocks jumping

May 21, 2018 - 4:26 pm
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By: Marley Jay 

NEW YORK (AP) — Stocks are rising Monday after the U.S. and China appeared to make major progress in trade talks. The Chinese government says it will buy more U.S. goods, including energy and agricultural products, and Treasury Secretary Steven Mnuchin says the U.S. postponed tariffs on up to $150 billion in goods from China. Industrial companies and banks are making some of the biggest gains and technology stocks are also climbing.

KEEPING SCORE: The S&P 500 index climbed 18 points, or 0.7 percent, to 2,731 as of 3:25 p.m. Eastern time. The Dow Jones industrial average rose 289 points, or 1.2 percent, to 25,005. It was up as much as 371 points earlier. The Nasdaq composite gained 29 points, or 0.4 percent, to 7,383. The Russell 2000 index of smaller-company stocks was on pace for another record close as it jumped 9 points, or 0.6 percent, to 1,636.

TRADE TALKS: The U.S. and China concluded two days of trade negotiations with an agreement not to impose tariffs on each other, while Beijing said it will buy more farm goods, energy and other products and services from U.S. companies. The two sides gave no indication of how much progress they had made toward ending their dispute entirely and both said hostilities could increase again.

Among industrials, Boeing gained 3.5 percent to $363.59 and construction equipment maker Caterpillar rose 2.3 percent to $159.37. In the financial sector, JPMorgan Chase rose 0.9 percent to $112.18 and Morgan Stanley added 0.9 percent to $54.41.

Trade disputes have occupied a lot of investors' attention for the last two months and stocks have rallied on signs progress was being made, only to fall back when the situation appeared to worsen.

THE QUOTE: Mark Hackett, chief of investment research at Nationwide Investment Management, said investors overreacted to the possibility of a trade war and they may be slowly learning to take a more patient approach with statements by the Trump administration and other nations, which is a good thing, Hackett says, because future administrations may borrow from Trump's aggressive style.

"Treating Trump literally is destructive for investors," he said. "There's a lot of these issues where there are going to be hyperbolic statements made in the public sphere by both sides."

RIDING THE RAILS: General Electric's train engine division will combine with railroad equipment maker Westinghouse Air Brake Technologies in deal worth $11.1 billion as GE CEO John Flannery continues to break off parts of the conglomerate. GE will get $2.9 billion in cash and will own 50.1 percent of the combined company, and the deal will help it narrow its business down to the aviation, health care and energy industries.

Wabtec gained 3.8 percent to $98.80 and GE rose 2.6 percent to $15.36.

BANK ON IT: Fifth Third Bancorp is buying Chicago's MB Financial for about $4.7 billion, mostly in stock. The deal values MB at $54.20 per share, and its stock rose 12.7 percent to $49.18 while Fifth Third tumbled 8 percent to $30.88.

GET A ROOM: Investment manager Blackstone agreed to buy LaSalle Hotel Properties for $33.50 a share, or $3.7 billion in cash. LaSalle jumped 5.6 percent to $33.70 while Blackstone rose along with other financial firms and gained 1.6 percent to $31.79.

CHIPS CLIMB: Chipmakers rallied after Micron Technology raised its profit and revenue forecasts for the fiscal third quarter. Micron jumped 3.9 percent to $55.47 while Intel picked up 1.2 percent to $54.14 and Lam Research added 2 percent to $199.45.

That contributed to a broad rally in technology stocks. Microsoft gained 1.1 percent to $97.42 and Google's parent company Alphabet rose 1.3 percent $1,083.35 as technology companies advanced.

CURRENCIES: The dollar rose to 111.11 yen from 110.68 yen late Friday. The euro dipped to $1.1772 from $1.1773.

OIL: Benchmark U.S. crude oil rose 1.3 percent to $72.24 a barrel in New York. Brent crude, used to price international oil, added 0.9 percent to $79.22 per barrel in London.

Wholesale gasoline added 1 percent to $2.26 a gallon and heating oil rose 0.4 percent to $2.27 a gallon. Natural gas fell 1.3 percent to $2.81 per 1,000 cubic feet.

METALS: Gold was little changed at $1,290.90 an ounce. Silver rose 0.4 percent to $16.52 an ounce. Copper picked up 1.1 percent to $3.10 a pound.

BONDS: Bond prices held steady. The yield on the 10-year Treasury note stayed at 3.06 percent.

OVERSEAS: The British FTSE 100 gained 1 percent and France's CAC 40 rose 0.5 percent. The German market was closed for a holiday. Japan's Nikkei 225 rose 0.3 percent. Hong Kong's Hang Seng gained 0.6 percent and South Korea's Kospi added 0.2 percent.

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