U.S. Stocks Rebound To Record Highs After Last Week’s Pullback

Stocks showed a strong move to the upside over the course of the trading session on Monday, more than offsetting the modest pullback seen last week. With the upward move, the major averages ended the day at new record closing highs.

The major averages reached new highs going into the close of trading. The Dow climbed 190.85 points or 0.7 percent to 28,066.47, the Nasdaq surged up 112.60 points or 1.3 percent to 8,632.49 and the S&P 500 advanced 23.35 points or 0.8 percent to 3,133.64.

The strength on Wall Street partly reflected continued optimism about a U.S.-China trade agreement after a tabloid run by China’s ruling Communist Party discounted “negative” media reports and said the economic superpowers are “very close” to a phase one deal.

The state-backed Global Times also said China remains committed to continuing talks for a phase two or even a phase three deal with the United States.

President Donald Trump and Chinese President Xi Jinping have also recently made positive comments about a potential trade deal despite reports of complications arising that could delay the agreement until next year.

News on the merger-and-acquisition front also generated positive sentiment, as the deals suggest companies remain confident even with the uncertainty created by the U.S.-China trade dispute.

Shares of The Medicines Company (MDCO) moved sharply higher after the biopharmaceutical company agreed to be acquired by Swiss drugmaker Novartis for $9.7 billion or $85 per share in cash.

Jeweler Tiffany (TIF) also showed a strong move to the upside after agreeing to be acquired by France’s LVMH for $16.2 billion or $135 per share in cash.

Discount broker Charles Schwab (SCHW) also reached an agreement to acquire rival TD Ameritrade (AMTD) in an all-stock transaction valued at approximately $26 billion.

Sector News

Biotechnology stocks turned in some of the market’s best performances on the day, with the NYSE Arca Biotechnology Index surging up by 2.5 percent to a seven-month closing high.

Significant strength also emerged among oil service stocks, as reflected by the 2.5 percent jump by the Philadelphia Oil Service Index. The strength in the sector came amid a modest increase by the price of crude oil.

Semiconductor stocks also saw considerable strength, driving the Philadelphia Semiconductor Index up by 2.4 percent

Nvidia (NVDA) posted a standout gain after Morgan Stanley upgraded the graphics chip maker’s stock to Overweight from Equal-weight.

Brokerage, computer hardware, tobacco and steel stocks also saw notable strength on the day, while gold stocks came under pressure amid a decrease by the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Monday. Japan’s Nikkei 225 Index advanced by 0.8 percent, while Hong Kong’s Hang Seng Index surged up by 1.5 percent.

The major European markets also moved to the upside on the day. While the U.K.’s FTSE 100 Index jumped by 1 percent, the German DAX Index and the French CAC 40 Index climbed by 0.6 percent and 0.5 percent, respectively.

In the bond market, treasuries moved slightly higher over the course of the session after seeing initial weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1 basis point to 1.764 percent.

Looking Ahead

News on the trade front is likely to remain in focus, although trading on Tuesday may also be impacted by reaction to reports on new home sales and consumer confidence.

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