Stocks Rise as U.S., China Sign Trade Deal


Stocks Rise as U.S., China Sign Trade Deal

U.S. stocks rose to new highs as President Trump signed an initial trade pact with China, halting a two-year trade dispute between the world’s two largest economies.

The Dow Jones Industrial Average gained 0.5% in midday trading. The S&P 500 climbed 0.4%, while the Nasdaq Composite rose 0.4%. All three indexes hit intraday records.

Mr. Trump convened with U.S. and Chinese officials at the White House for the signing ceremony around midday. Although details of the deal weren’t fully clear, Washington was expected to suspend planned tariff increases on Chinese imports, in exchange for commitments by Beijing to step up orders of a range of U.S. products.

Still, a continuing battle over technology may keep relations on edge as the Trump administration focuses on tightening restrictions on Huawei Technologies Co., which U.S. officials view as a national-security threat.

Investors were also paying close attention to the first week of U.S. corporate earnings season.


Photo:

brendan mcdermid/Reuters

The “phase-one” deal itself is a disappointment as it reflects a compromise measure, some analysts said.

President Trump “wants the U.S. economy to be humming along going into the presidential election,” said Lyn Graham-Taylor, fixed-income strategist at Rabobank. “But on the flip side, he doesn’t want to be seen as weak on China, so he is doing a balancing act.”

Investors were also paying close attention to the first week of U.S. corporate earnings season. Strong earnings growth this year will help determine whether the stock market continues to rally.

“You need to justify valuations, and for that you need a strong earnings season,” said Philip Blancato, president and CEO Ladenburg Thalmann Asset Management.

Financial stocks declined as the latest round of big bank earnings largely disappointed. The Nasdaq KBW Bank index fell 1.4%.

Bank of America

shares fell 2.1% after the second-largest U.S. bank by assets said its profit dropped in the fourth quarter.

U.S. Bancorp

reported its smallest quarterly profit in two years, pushing its shares down 3.1%.

Shares of

Goldman Sachs

initially dropped, but later rebounded after the investment bank said it set aside more money toward an expected government settlement resolving its ties to a corrupt Malaysian investment fund. The stock was recently up 0.9%.

Elsewhere, Target declined 7.3% after the retailer posted disappointing sales for the holiday period, particularly in toys and electronics. The weak figures had a wider fallout across the industry, with shares in consumer-electronics retailer

Best Buy

falling 1.2%.

Overseas, the pan-continental Stoxx Europe 600 index inched up less than 0.1%. The Shanghai Composite closed 0.5% lower.

With Beijing and Washington set to seal a first-stage trade pact, U.S. farmers are optimistic about the future. But some experts wonder if China’s commitment to the agreement will live up to the White House’s expectations. Photo: Scott Olson/Getty Images

Write to Alexander Osipovich at alexander.osipovich@dowjones.com and Avantika Chilkoti at Avantika.Chilkoti@wsj.com

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