Dow Jones Industrial Average rises 200 points after Trump extends March trade deal deadline with China

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From Fred Imbert: Stocks rose on Monday after President Donald Trump said he would delay placing additional tariffs on Chinese goods. Equities also got a boost from dealmaking activity.

The Dow Jones Industrial Average jumped 160 points, led by gains in  Caterpillar and Goldman Sachs. The S&P 500 gained 0.5 percent as the industrials and financials sectors outperformed. The Nasdaq Compositeclimbed 0.6 percent.

Trump said in a series of tweets the U.S. would not add more tariffs on imports from China at the start of March. He cited “substantial progress” in bilateral talks between the world’s two largest economies, including intellectual property protection and technology transfer issues. However, he did not state a new deadline.

Donald J. Trump


I am pleased to report that the U.S. has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues. As a result of these very……

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Donald J. Trump


….productive talks, I will be delaying the U.S. increase in tariffs now scheduled for March 1. Assuming both sides make additional progress, we will be planning a Summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement. A very good weekend for U.S. & China!

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Chinese stocks rallied on Trump’s tweets overnight. The Shanghai Composite surged 5.6 percent, posting its biggest one-day gain since July 9, 2015. Meanwhile, the iShares China Large-Cap exchange-traded fund (FXI) gained nearly 2 percent in U.S. trading. Trade bellwethers Caterpillar and Boeing rose 2.3 percent and 0.7 percent, respectively.

Trump hinted last week that a delay may be happening when he said the early March deadline was not a “magical date.” The news also comes after sources familiar with the situation told CNBC last week that the United States and China are discussing a late March meeting between Trump and Chinese President Xi Jinping in Florida.

“The market seems to expect a grand ‘trade deal’ soon that marks a NAFTA2 -like quiet end to President Trump’s trade actions,” Barry Bannister, head of institutional equity strategy at Stifel, wrote in a note. However, “major deals bring unexpected changes, and also the U.S./Europe (autos) conflict awaits.”

Sentiment was also lifted after General Electric announced it will sell its biopharmaceutical business to Danaher for $21.4 billion. News of the deal sent GE shares flying more than 8 percent. Danaher’s stock jumped 7.8 percent.

Meanwhile, Barrick Gold launched a bit to acquire Newmont Mining for $7 billion in an all-stock deal. If approved, the deal would come after years of stagnant gold prices. The precious metal has been trading between $1,000 and $1,400 per ounce in recent years.

The major indexes kicked off the week after notching solid weekly gains. Last week, the Dow and Nasdaq posted their ninth straight weekly gain, while the S&P 500 recorded its eight one-week gain in nine.

“While sentiment is growing a bit more constructive from its December 2018 pessimistic levels, it’s nowhere near levels of complacency that marked the peak around this time last year,” said Mark Newton, managing member at Newton Advisors. “Heading into the final week of February, there still seems to be little with regards to price or momentum lately that would suggest this trend is stalling out.”

–CNBC’s Spriha Srivastava and Eustance Huang contributed to this report.

The SPDR Dow Jones Industrial Average ETF (DIA) was trading at $261.84 per share on Monday afternoon, up $1.67 (+0.64%). Year-to-date, DIA has gained 6.73%, versus a 5.55% rise in the benchmark S&P 500 index during the same period.

DIA currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #4 of 82 ETFs in the Large Cap Value ETFs category.

This article is brought to you courtesy of CNBC.