Wall Street closed higher on Monday amid hopes of a potential breakthrough in trade tensions between the U.S. and China, the world’s two largest economies.
The Dow Jones industrial average rose 68.24 points to 24,899.41, with UnitedHealth and Walmart as the best-performing stocks in the index. The 30-stock index also extended its winning streak to eight straight days. The S&P 500 gained 0.1 percent to close at 2,730.13, with energy, health care and materials outperforming. The Nasdaq composite advanced 0.1 percent and finished at 7,411.32.
President Donald Trump pledged Sunday to help Chinese technology firm ZTE Corp to “get back into business, fast” after a U.S. ban had significantly hampered the Asian company.
“It’s being perceived as healthy,” said Daniel Deming, managing director at KKM Financial. “The market sees it as extending an olive branch.”
Trump’s tweet on Sunday came ahead of the second round of trade talks between the U.S. and China this week. Trade officials are seeking to find a way to resolve an ongoing trade dispute, although Beijing has already said it will not change its current position over the coming days.
“For the President to become suddenly concerned about Chinese jobs is quite a volte-face,” said Jonathan Fenby, chairman of China research at TS Lombard. “The most probable explanation can only be that he wants to butter up Xi with a concession on the trade front to get China’s help to make [North Korean leader] Kim Jong-un amenable to a deal at the Singapore summit, in an application of linkage he advanced last year of Korea and China trade issues.”
Trump and Kim are scheduled to meet in Singapore on June 12. The encounter between the two leaders would mark the first-ever meeting between a U.S. president and a North Korean leader.
Optical component makers saw their stocks jump on Trump’s ZTE news, with Oclaro, Lumentum and Finisar rising 2.9 percent, 2.2 percent and 1 percent, respectively. Acacia Communications also surged 8.7 percent.
Chip stocks rose Monday after a report said Chinese regulators will restart a review of the proposed acquisition of NXP Semiconductors by Qualcomm. NXP shares jumped 11.9 percent on the news, while Qualcomm’s stock gained 2.7 percent. The Vaneck Vectors Semiconductor ETF (SMH) 1.7 percent on the news.
Still, Commerce Secretary Wilbur Ross said the gap between the U.S. and China “remains wide.” He also said: “Before landing in China we sent them an extremely detailed list of our needs, and they responded with a similarly detailed but as you can imagine quite different list of their proposals.”
Equities came into the session riding last week’s strong gains. The Dow posted its biggest weekly gain since March last week while the S&P 500 and Nasdaq climbed 2.4 percent and 2.7 percent, respectively.
In corporate news Monday, Xerox fell more than 4 percent after the company abandoned a $6.1 billion deal with Japanese firm Fujifilm as part of a settlement between Carl Icahn and Darwin Deason.