Stocks Climb on Trade Talks and Encouraging Economic Report
U.S. stocks are rising again as retailers and smaller companies rally after a report showed strong orders last month for service-sector companies, where most Americans work and more in Monday’s Stock Market Update. Representatives from the U.S. and China began another round of trade negotiations. Technology and health care companies also rose.
STOCK MARKET UPDATE
KEEPING SCORE: The S&P 500 index added 17 points, or 0.7 percent, to 2,549 at closing time. The Dow Jones Industrial Average climbed 99 points, or 0.4 percent, to 23,532. The Nasdaq gained 84 points, or 1.3 percent, to 6,823. The Russell 2000 index jumped 25 points, or 1.9 percent, to 1,406.
The S&P 500 is on track for its highest close in more than three weeks. It has climbed 9.5 percent since Dec. 24, but is still 13 percent below its record high from late September.
SURVEY SAYS: The Institute for Supply Management said an index of new orders for service companies rose last month. Overall, U.S. service firms kept growing, although the pace of that growth slowed somewhat. The services sector covers a broad variety of industries including banking, education, health care and construction.
Amazon rose 3 percent to $1,622 and Home Depot picked up 2 percent to $177.80 while General Motors climbed 3.6 percent to $34.53.
HIGH HOPES: Stocks have risen recently as investors hoped that the U.S. and China will finally make progress in trade talks. But they remain fearful that the trade dispute is far from a resolution. The U.S. and China both placed new tariffs on billions of dollars’ worth of each other’s imports in 2018, and those taxes are likely to rise in March if they don’t make progress in negotiations.
Reports of the latest round of trade discussions contributed to the market’s big rally Friday.
SHAKING THE TREE: Dollar Tree rose after activist investment firm Starboard value disclosed a stake in the discount retailer and pushed the company to consider changes, including selling the Family Dollar business it bought in 2015. It nominated seven candidates for seats on Dollar Tree’s board of directors. The stock climbed 4.8 percent to $97.30.
POWER FAILURE: The parent company of Pacific Gas & Electric plunged after Reuters reported that the company might file for bankruptcy protection as it faces potentially huge liabilities connected to deadly wildfires in California. The cause of the Camp wildfire hasn’t been determined, but PG&E reported an outage around the time and place it began. The fire killed at least 86 people and destroyed 15,000 homes. PG&E also faces lawsuits related to wildfires in 2017.
The company’s stock dropped 22 percent to $19.02. PG&E stock traded at almost $70 a share in October 2017 and was valued at about $48 in November 2018.
ENERGY: Oil prices continued their recent rally. U.S. crude rose 1.2 percent to $48.52 per barrel in New York. After sinking to an 18-month low of $42.53 a barrel on Dec. 24, the price of U.S. crude has risen for seven of the last eight trading days, and is up 14 percent over that time. Brent crude, used to price international oils, rose 0.5 percent to $57.33 per barrel in London.
LILLY AND LOXO: Eli Lilly will buy Loxo Oncology for about $8 billion as it bulks up on cancer treatments that target gene abnormalities. Loxo soared 66.5 percent to $232.85 and Eli Lilly added 0.4 percent to $115.17.
The deal marks the second big pharmaceutical acquisition announced in the new year. On Thursday Bristol-Myers Squibb agreed to buy Celgene for $74 billion in cash and stock, one of the largest drug industry acquisitions of all time.
POLITICAL RISKS: The partial shutdown of the U.S. government stretched into its third week, and there were few signs of progress in staff-level talks over the weekend. That means many hundreds of thousands of federal workers aren’t getting their paychecks, which could slow the economy.
SHOCK EXCHANGE: Shares of the companies that run stock exchanges fell after a group of nine banks, brokers and other companies said they are planning to launch a new exchange. The companies said the Members Exchange will reduce costs and simplify trading.
Nasdaq fell 2.9 percent to $79.58 and Intercontinental Exchange, the parent company of the New York Stock Exchange, fell 2.6 percent to $73.68. Cboe Global Markets shed 1.7percent to $96.69.
BOY TOYS: Mattel jumped 6.9 percent to $11.13 after the toy company said it’s gained the rights to make dolls of the South Korean pop band BTS. Last year BTS became the first K-Pop group to reach the top slot on the Billboard Top 200. The licensing agreement also covers collectible figures and games.
BONDS: Bond prices fell. The yield on the 10-year Treasury note rose to 2.68 percent from 2.65 percent.
OTHER COMMODITIES: Wholesale gasoline dipped 0.5 percent to $1.34 a gallon and heating oil rose 0.5 percent to $1.78 a gallon. Natural gas sank 3.3 percent to $2.94 per 1,000 cubic feet.
Gold rose 0.3 percent to $1,289.90 an ounce. Silver slipped 0.2 percent to $15.76 an ounce. Copper fell 0.4 percent to $2.64 a pound.
CURRENCIES: The dollar fell to 108.59 yen from 108.51 yen. The euro rose to $1.1477 from $1.1400. The British pound rose to $1.2766 from $1.2740.
OVERSEAS STOCK MARKET UPDATE: Germany’s DAX shed 0.2 percent and the FTSE 100 in Britain and CAC 40 France both fell 0.4 percent.
The Japanese Nikkei 225 index gained 2.4 percent, while South Korea’s Kospi rose 1.3 percent. Hong Kong’s Hang Seng climbed 0.8 percent.
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