Stocks finished higher on Monday amid U.S.-China trade optimism. The highly anticipated “phase one” accord is expected to be signed in Washington on January 15th. The White House further lifted sentiment by announcing plans to remove the label of “currency manipulator” for China ahead of Wednesday’s meeting. The S&P 500 added 0.7%, while the Nasdaq Composite was up 1%, with both benchmark indexes closing at fresh all-time highs. The Dow rose 83 points.
Ten of 11 S&P 500 sectors closed in positive territory with Technology shares pacing gains, jumping more than 1.3%. Meanwhile, the Health Care group was the sole laggard. In corporate news, Lululemon gained 4.4% following a boost to its profit and sales outlook. Five Below dropped 11.4% after slashing its revenue guidance. Tesla advanced 9.8% on news that China would not significantly reduce subsidies for new energy vehicles this year.
Fourth-quarter earnings season officially kicks off tomorrow, with some of Wall Street’s biggest banks headlining the docket. Analysts are projecting a 1.6% decline in S&P 500 profits during the final quarter of 2019, compared to a year ago, according to Bloomberg.
Treasuries declined, with the yield on the 10-year note up two basis points to 1.84%. On the data front, the lone update was the U.S. monthly budget statement, which showed the deficit unexpectedly narrowed in December compared to a year ago. In commodities, WTI crude slipped 1.6% to $58.08/barrel, its lowest level since early December as tensions between the U.S. and Iran seemed to have abated. COMEX gold fell 0.7% to $1,549.90/ounce.