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Renewed Optimism About Trade Deal Leads To Strength On Wall Street

wallstreet oct30 21oct19 lt

Following the mixed performance seen last week, stocks moved mostly higher over the course of the trading session on Monday. With the upward move, the Nasdaq and the S&P 500 reached their best closing levels in a month.

The major averages all closed in positive territory, although the Dow posted a relatively modest gain. While the Dow rose 57.44 points or 0.2 percent to 26,827.64, the Nasdaq advanced 73.44 points or 0.9 percent to 8,162.99 and the S&P 500 climbed 20.52 points or 0.7 percent to 3,006.72.

The strength on Wall Street came amid renewed optimism about the completion of phase one of a U.S.-China trade deal following comments from President Donald Trump and Chinese Vice Premier Liu He.

Trump said last Friday he thought an agreement would be signed by the time the Asia-Pacific Economic Cooperation meetings take place in Chile on November 16 and 17.

At a cabinet meeting earlier today, Trump told reporters that the trade deal is coming along great. He also claimed issues in phase two of the deal would be a lot easier to work out than those in phase one.

Meanwhile, Liu said that China and the United States would work to address each other's core concerns on the basis of equality and mutual respect.

"China and the U.S. have made substantial progress in many aspects, and laid an important foundation for a phase one agreement," Liu said at a tech conference on Saturday, according to Bloomberg News.

The strong corporate results reported last week also made traders hopeful as earnings season gets into full swing in the coming days.

McDonald's (MCD), Procter & Gamble (PG), UPS (UPS), Caterpillar (CAT), eBay (EBAY), Ford (F), Microsoft (MSFT), Tesla (TSLA), Twitter (TWTR), Amazon (AMZN), and Intel (INTC) are just a few of the companies due to report their results this week.

Meanwhile, a steep drop by shares of Boeing (BA) limited the upside for the Dow, with the aerospace giant tumbling by 3.8 percent.

Boeing extended last Friday's sell-off after the aerospace giant expressed regret over the concern caused by leaked messages from a former test pilot revealing he unintentionally misled safety regulators about the grounded 737 MAX jet's control system.

Sector News

Oil service stocks moved sharply higher over the course of the trading session, driving the Philadelphia Oil Service Index up by 3.4 percent.

Industry giant Halliburton (HAL) led the oil service sector higher after reporting third quarter earnings in line with analyst estimates.

Significant strength also emerged among banking stocks, as reflected by the 1.8 percent jump by the KBW Bank Index. The index ended the session at a nearly three-month closing high.

Semiconductor, computer hardware, and networking stocks also saw considerable strength on the day, moving higher along with most of the other major sectors.

Meanwhile, gold stocks bucked the uptrend by the broader markets, resulting in a 2.3 percent slump by the NYSE Arca Gold Bugs Index.

The weakness among gold stocks came amid a decrease by the price of the precious metal, with gold for December delivery sliding $6 to $1,488.10 an ounce.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved modestly higher during trading on Monday. Japan's Nikkei 225 Index rose by 0.3 percent, while China's Shanghai Composite Index inched up by 0.1 percent.

The major European markets also moved to the upside on the day. While the German DAX Index advanced by 0.9 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index both edged up by 0.2 percent.

In the bond market, treasuries came under pressure after ending last Friday's trading slightly higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.5 basis points to 1.792 percent.

Looking Ahead

Trading on Tuesday may be impacted by reaction to earnings news big-name companies such as McDonald's, Procter & Gamble, and UPS, which are due to report their quarterly results before the start of trading.

A National Association of Realtors report on existing home sales in the month of September may also attract some attention.

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