Technology companies led stocks broadly higher on Wall Street Monday afternoon, placing the S&P 500 and Nasdaq composite indexes on track for more record highs.
The rally, which added to the market's gains from last week, came as investors looked ahead to the signing of an initial trade deal with China and the potential for future talks. Wall Street was also looking ahead to a busy opening week of corporate earnings being kicked off by major banks.
The world’s largest economies are expected to sign the “Phase 1” trade agreement on Wednesday. It is being viewed as an opening to future negotiations that will deal with more complicated trade issues. Even a partial deal should remove much of the uncertainty that has weighed on companies and investors, at least until after the election, said Scott Ladner, chief investment officer for Horizon Investments in Charlotte.
“We don't think the tariff overhang is going to be very relevant over the next nine months,” Ladner said. “Acting tough with China and imposing tariffs two years before an election is a very different story than doing it two months before an election.”
Chipmakers were among the gainers in the technology sector. Nivida climbed 3.2% and Micron Technology rose 1%. The sector is particularly sensitive to developments in trade relations because many of the companies rely on China for sales and supply chains. Apple also rose, adding 1.5%.
Industrial and communication services companies also made solid gains. General Electric rose 3.6% and Facebook added 1.3%.
Electric car maker Tesla jumped 8.3% and was on track to close above $500 for the first time.
Health care stocks slumped, with insurance companies among the sector's biggest decliners. Cigna fell 3.6%, UnitedHealth Group slid 3.1% and Anthem dropped 3.3%.
The yield on the 10-year Treasury rose to 1.84% from 1.82% late Friday, in another sign that investors are heading into the week with confidence. The pickup in yields helped lift financial stocks, as it make it possible for banks to charge higher interest rates on mortgages and other consumer loans. Goldman Sachs and Citigroup each rose 1.3%.
KEEPING SCORE: The S&P 500 index was up 0.6% as of 3:25 p.m. Eastern time. The Dow Jones Industrial Average rose 46 points, or 0.2%, to 28,869. The Nasdaq rose 0.9%. The Russell 2000 index of smaller company stocks gained 0.6%.
STRONG DEFENSE: Hexcel vaulted 9.9% after the company said it is being bought by rival Woodward in a deal that will create one of the largest suppliers in the aerospace and defense industry. Woodward rose 5.4% and will own the majority of the combined company when the deal closes.
TAKE A BOW: Netflix climbed 2.9% as the streaming video service earned two best picture nominations for the 92nd annual Academy Awards. Both Martin Scorsese’s “The Irishman” and Noah Baumbach’s “Marriage Story” are contenders. The streaming video service has been pushing further into production of its own movies and original programming as competition heats up with other services, including Amazon and Hulu, along with traditional players such as HBO.
EARNINGS AHEAD: Wall Street expects corporate profits to slide by 2% during the fourth quarter, which would mark the first time earnings for the S&P 500 would fall four quarters in a row since the period ending in mid-2016, according to FactSet. Companies typically outperform forecasts and temper expectations for sharp declines by the time the bulk of financial reporting is done.
“The management outlooks for this quarter are probably going to be as much, if not more important, than the actual numbers themselves,” Ladner said.
Banks will be the first major companies to give investors a clearer profit picture for the final quarter of 2019. JPMorgan Chase, Wells Fargo and Citigroup will report fourth-quarter earnings on Tuesday and Bank of America will follow on Wednesday.
Delta Air Lines will be the first major airline to report financial results on Tuesday. The nation’s largest health insurer, UnitedHealth Group, will report earnings on Wednesday and railroad operator CSX will report on Thursday.
ECONOMY IN FOCUS: Wall Street will also have several economic reports to consider this week. The government will release its December reports on consumer prices and wholesale prices on Tuesday and Wednesday, respectively.
The government will also release December reports for retails sales and home construction activity this week.
AP Business Writer Damian J. Troise contributed.