Technology companies helped power stocks higher on Wall Street in late-afternoon trading Monday after the U.S. and Mexico averted a trade war and potentially damaging tariffs.
The latest gains put the benchmark S&P 500 index on track to extend its winning streak to a fifth day following the strongest week for stocks since November.
U.S. President Donald Trump suspended plans to impose tariffs on Mexican goods after the countries struck a deal on immigration. The spat threatened to raise costs for American companies and consumers and expand a global trade war that already includes China.
Auto and consumer-related companies would have suffered from new tariffs. Ford rose 0.7% and General Motors gained 1.6%. Constellation Brands, which makes Corona beer, rose 2.3%.
Several megadeals also helped nudge stocks higher. Industrial giant United Technologies is merging with weapons contractor Raytheon in a deal that will create an arms powerhouse with higher sales than rivals Lockheed Martin and Northrop Grumman. Meanwhile, customer-management software developer Salesforce is buying data analytics company Tableau Software in an all-stock deal valued at $15.7 billion.
Technology companies led the gains and Apple rose 1.6%. Chipmakers made some of the biggest moves, with Nvidia adding 2.4% and Qualcomm rising 2.9%.
Banks were also among the biggest gainers as lower bond prices pushed yields higher. Higher yields raise banks' profits from loan interest. Bank Of America gained 2.6% and Citigroup rose 2.5%.
Consumer-related and internet stocks also gained ground as investors shifted into high-growth holdings and away from utilities and other safe-play sectors. Amazon climbed 3.5% and Facebook added 1.4%.
Utilities and consumer staples lagged other sectors.
KEEPING SCORE: The S&P 500 index was up 0.7% as of 3:34 p.m. Eastern time. After a 4.4% gain last week, the benchmark index was 2.5% below its record set on April 30 as of Friday. The Dow Jones Industrial Average rose 135 points, or 0.5%, to 26,119. The Nasdaq composite climbed 1.3%. The Russel 2000 index of smaller companies gained 0.8%.
Stock indexes in Europe finished broadly higher.
ANALYST'S TAKE: "Relief in trade tensions, in terms of Mexico, and hope for relief in trade tensions with China seem to be helping the market today," said Willie Delwiche, investment strategist at Baird.
The latest gains build on the market's momentum from last week.
"We have essentially, over five trading days, undone the preceding 19 days' worth of weakness," Delwiche noted.
Other market indicators signal that investors are still worried about the potential for an economic slowdown.
The yield on the 10-year Treasury note remains sharply lower from where it was at the beginning of May, before the Trump administration's tariff threats escalated trade conflicts with China and Mexico. That spooked investors, triggering a monthlong sell-off that derailed the market's strong start to the year.
"If you look beyond the S&P 500, it's not nearly as rosy a picture," Delwiche said. "You don't want to make too much of what we've seen over the past week. It's been encouraging, but it's by no means an all-clear, everything-is-OK signal."
STRONG DEFENSE: Raytheon rose 1% after the company said it will merge with United Technologies to create one of the world's largest defense contractors.
The combined company will have sales of about $74 billion, pushing it ahead of competitors including Lockheed Martin and Northrop Grumman. Boeing, which has a significant defense segment, has annual sales of about $100 billion.
United Technologies dropped 2.7%.
Raytheon is known for its missiles, including the Patriot system. United Technologies makes aircraft engines, among other industrial products.
In 2018 there were eight defense sector mergers exceeding $1 billion in value, including an all-stock deal between L3 Technologies and Harris and General Dynamics' acquisition of CSRA Inc., according to PricewaterhouseCoopers.
USE THE FORCE: Tableau shares surged 33.9% after customer-management software developer Salesforce said it would buy the company in an all-stock deal valued at $15.7 billion.
Salesforce fell 5.1%.
Tableau uses self-service analytics to help people with any skill level work with data. Companies using its services include Charles Schwab, Verizon and Netflix. More software and technology companies are adding data analytics operations to bolster their offerings.
Other data companies gained ground following news of the deal. Citi analyst Tyler Radke pointed out several other data analytics companies that could make attractive buyout targets. Alteryx climbed 2.6% and MongoDB added 1.2%.
The deal comes a few days after Google said it is purchasing data analytics firm Looker for $2.6 billion in order to expand its Google Cloud business.