Wall Street hits record, boosted by trade and earnings optimism

Apple, Alphabet and other tech favourites propelled Wall Street to record highs on Monday, fuelled by optimism about the signing of a preliminary US-China trade deal, as well upcoming fourth-quarter earnings reports.

Apple, Facebook, Netflix, Microsoft and Amazon.com, which have powered the longest bull run in US equities, were among the top contributors to record high closes for the S&P 500 and Nasdaq.

Apple rose 2.14% to close at a record high. Also reaching a record high, Google-owner Alphabet added 0.8%, bringing its market capitalisation to $993 billion.

An easing of Middle East tensions and the Phase 1 US-China trade agreement, which is expected to be signed in Washington on Wednesday, have encouraged riskier bets over the last week.

“People are optimistic about earnings and they’re also relieved that the Iran situation last week didn’t end up being worse than it was, and people are happy that China and the US are coming together to sign the Phase 1 trade deal. There’s a lot to be optimistic about,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.

Bloomberg, citing sources, reported that the Trump administration planned to lift its designation of China as a currency manipulator, adding to the positive mood.

Investors are awaiting earnings from big banks JPMorgan Chase & Co, Citigroup and Wells Fargo & CO, which kick off the fourth-quarter reporting season from Tuesday.

Analysts expect profits at S&P 500 companies to drop 0.6% for a second consecutive quarter, according to Refinitiv IBES data.

Many investors, however, are already looking ahead to a potentially rosier earnings outlook once Washington and China resolve their trade dispute.

The Dow Jones Industrial Average rose 0.29% to end at 28,907.05, while the S&P 500 gained 0.70% to 3,288.13, its highest close ever.

The Nasdaq Composite jumped 1.04% to 9,273.93, also a record high.

Aerospace companies Hexcel and Woodward jumped 9.6% and 4.8%, respectively, after the two Boeing suppliers said they would combine in an all-stock merger valued at $6.43 billion.

Tesla surged 9.8% to a record high after a report that China would not make significant cuts to subsidies for new energy vehicles this year, while Oppenheimer boosted its price target on the stock.

Advancing issues outnumbered declining ones on the NYSE by a 2.40-to-1 ratio; on Nasdaq, a 1.73-to-1 ratio favoured advancers.

The S&P 500 posted 64 new 52-week highs and 1 new low; the Nasdaq Composite recorded 155 new highs and 31 new lows.

Volume on US exchanges was 70 billion shares, about average over the last 20 trading days.