Wall Street adds to recent rally on Mexico relief, deal optimism

Reuters

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10.06.2019 19:27

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NEW YORK (Reuters) - U.S. stocks extended their recent climb on Monday, with the Dow on track for a 6th straight day of gains after the United States dropped plans to impose tariffs on Mexican goods and after a couple of multibillion-dollar deals.

The recent gains put the S&P 500 index roughly 2% shy of its early May record high, while the Dow was set to register its longest winning streak in about 13 months.

Mexico on Friday agreed to step up efforts to stem the flow of illegal Central American migrants after Washington threatened to impose a 5% import tariffs on all Mexican goods starting Monday.

Among major deals, United Technologies Corp agreed to combine its aerospace business with defense contractor Raytheon Co to create a new company worth about $121 billion.

While strategists said the trade news was behind much of the day’s gains, some said they feared the market had been rallying too much on hope of what may come on the trade front and from the Federal Reserve.

“(The) market is really optimistic. We’ve had a tremendous rally in the span of five to six days,” said Michael O’Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.

“There is a risk that the market will be disappointed if the Fed does not signal some type of rate cut,” he said.

Hopes that the Fed, which meets next week, would turn more accommodative to blunt the impact of escalating trade tensions have helped support stocks in recent days.

The Dow Jones Industrial Average rose 148.01 points, or 0.57%, to 26,131.95, the S&P 500 gained 21.07 points, or 0.73%, to 2,894.41 and the Nasdaq Composite added 109.27 points, or 1.41%, to 7,851.37.

Shares of United Technologies, however, dropped 2.4%, after Trump said he was a “little concerned” about their merger as it could take away competition in the sector. Raytheon rose 1.2%.

Salesforce.com Inc said it would buy big data firm Tableau Software for $15.3 billion. Salesforce.com shares fell 5.7%, while those of Tableau surged 33%.

U.S. automakers, which have long built vehicles in Mexico, traded higher, with General Motors Co gaining 1.6% and Ford Motor Co 0.7%. Corona beer maker Constellation Brands, which has significant Mexico exposure, rose 2.4%.

Advancing issues outnumbered declining ones on the NYSE by a 1.79-to-1 ratio; on Nasdaq, a 2.01-to-1 ratio favored advancers.

The S&P 500 posted 62 new 52-week highs and two new lows; the Nasdaq Composite recorded 96 new highs and 49 new lows.

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