Dow rises nearly 200 points after the US and Canada strike a deal to replace NAFTA
Stocks rally on trade deal
Stocks closed higher on the first day of the fourth quarter as investors cheered news of Canada joining a trade deal with the United States and Mexico.
The Dow Jones Industrial Average rose 192.90 points to 26,651.21 on Monday as Chevron and Boeing outperformed. The S&P 500 gained 0.4 percent to 2,924.43, led by gains in energy, materials and industrials shares. The Nasdaq Composite closed 0.1 percent lower at 8,037.30, however, as declines in Facebook and Intel capped gains in tech.
Shares of Ford and General Motors advanced 0.8 percent and 1.6 percent, respectively, following the news. Boeing, a stock that is also sensitive to trade news, rose 2.8 percent.
"The biggest risk factor [in the market] is a trade war and we've dialed that down a bit," said Mike Bailey, director of research at FBB Capital Partners. Bailey noted, however, the market may be going too high, too fast right now. "I'm not calling for a major correction or a bear market, but I think we're getting a bit ahead of ourselves here."Drew Angerer | Getty Images News | Getty Images Traders work on the floor of the New York Stock Exchange (NYSE) ahead of the closing bell, November 30, 2017 in New York City.
Canada and the U.S. secured a trade deal to replace the current North American Free Trade Agreement (NAFTA). The new accord is expected to be named the United States-Mexico-Canada Agreement, or "USMCA" for short.
The agreement will deliver more market access to U.S. dairy farmers, while Canada has effectively capped automobile exports to the States. Both nations, along with Mexico â" which agreed to a deal August â" are expected to sign the agreement by the end of November. It would then be passed to Congress.
"The market is happy because we're removing an uncertainty," said Maris Ogg, president at Tower Bridge Advisors. "It looks like this trade deal will benefit both countries, but I wouldn't call it a great win for the Trump administration."
Ogg noted the deal serves as a stepping stone for the U.S. in its trade negotiations with China.
The U.S. and China have slapped tariffs on billions of dollars worth of each other's goods, stoking fears of a full-blown trade war between the two largest economies. Larry Kudlow, the top economic advisor at the White House, said trade discussions between the two countries are not progressing.New North American trade deal is âreal good newsâ for U.S. stocks, veteran market watcher says
The moves on Wall Street came after theS&P 500 notched its best quarter since 2013, having risen 7.2 percent in that time period.
Tesla shares surged more than 17 percent after CEO Elon Musk settled charges with the Securities and Exchange Commission over his recent aborted bid to take the firm private.
As part of the settlement, Musk will relinquish his position as chairman of the board at Tesla for at least three years. Tesla and Musk will pay $20 million each.
Meanwhile, General Electric gained 7.1 percent after the company abruptly removed CEO John Flannery from his post and named Lawrence Culp as his successor.Source: Google News Canada | Netizen 24 Canada