Tags: wall street | nafta | deal | stocks | dow

Dow Soars 192 Points as Wall Street Applauds New NAFTA Deal

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Monday, 01 October 2018 04:26 PM EDT

Wall Street kicked off the fourth quarter on a positive note on Monday, as a last-minute deal to salvage NAFTA as a trilateral pact helped ease trade concerns.

Canada and Mexico accepted more restrictive commerce in the new United States-Mexico-Canada Agreement (USMCA), which will make it harder for global automakers to build cars cheaply in Mexico and aims to bring more jobs to the United States.

Industrial stocks, and more specifically auto and rail-related shares rose. Ford (F.N) gained 1.3 percent, while General Motors (GM.N) advanced 1.4 percent. Among railroads, Kansas City Southern (KSU.N) rose 3.2percent.

The industrial sector, sensitive to trade developments in recent months, was up 1.1 percent, on track for their best day in five weeks.

“It is not all good, but it is unquestionably good to have the uncertainty removed and unquestionably good to have updated what was an old agreement that didn’t address a lot of the ways the economy has changed over the years,” said Christopher Smart, head of global macroeconomic and geopolitical research at Barings in Boston.

“The nearer term issue is will it get through Congress because trade is always so painful to get through the United States political system.”

The biggest boost to the industrials, however, was General Electric (GE.N), which rose 8.0 percent and was set for its best day in three-and-a-half years after replacing Chief Executive John Flannery with board member Larry Culp, who, investors hope can transform the company’s portfolio more quickly.

The Dow Jones Industrial Average rose 192 points, or 0.7 percent, to 26,651 after being up 279 points at one instance. Tthe S&P 500 gained 11 points, or 0.4 percent, to 2,924. The Nasdaq Composite dropped 9 points, or 0.1 percent, to 8,037.

Aside from industrials, the materials and energy sectors also rose more than 1 percent. Energy stocks got a boost as crude oil prices hit their highest level since 2014 on a combination of the new trade agreement and U.S. sanctions on Iran.

Smallcap stocks were under pressure, with the Russell 2000 off 0.97. Smaller names had been seen as more immune to trade pressures and the index is now off more than 3 percent from its Aug. 31 high.

The defensive real estate and utilities sectors led the decliners. The communications services index also fell 0.32 percent as media stocks lagged.

Tesla (TSLA.O) shares soared 16.8 percent as signs it had met targets for quarterly production numbers added to relief at Chief Executive Elon Musk’s settling a lawsuit with regulators that could have forced him out.

Declining issues outnumbered advancing ones on the NYSE by a 1.13-to-1 ratio; on Nasdaq, a 1.61-to-1 ratio favored decliners.

The S&P 500 posted 46 new 52-week highs and 6 new lows; the Nasdaq Composite recorded 95 new highs and 68 new lows.

© 2024 Thomson/Reuters. All rights reserved.

Wall Street kicked off the fourth quarter on a positive note on Monday, as a last-minute deal to salvage NAFTA as a trilateral pact helped ease trade concerns.
wall street, nafta, deal, stocks, dow
Monday, 01 October 2018 04:26 PM
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