Stocks posted solid gains on Monday after the White House said it reached a preliminary agreement with Mexico on replacing NAFTA. The Nasdaq composite index topped 8,000 for the first time.
The trade deal is far from final and few details were made public during trading hours Monday, but investors were encouraged that the countries are working toward a resolution.
Trader Peter Tuchman wears a "Dow 26,000" hat as he works on the floor of the New York Stock Exchange, Monday, Aug. 27, 2018. Global markets are rising Monday morning, and gains for technology companies, banks and industrial firms have U.S. stocks on track for more record highs. The Dow Jones Industrial Average jumped 208 points, or 0.8 percent, to 26,002. (AP Photo/Richard Drew)The U.S. still needs to reach an understanding with Canada, the third party in the accord and the second-largest trading partner for the U.S. Canada's NAFTA negotiator, Foreign Minister Chrystia Freeland, is scheduled to fly to Washington Tuesday to try to restart talks.
Automakers, which would stand to benefit from warmer trade relations between the U.S. and Mexico, rose sharply. Major exporters including chemical and industrial companies rose, and so did banks and technology companies.
"Most of this year has been a series of potentially negative events on trade, setting up barriers to trade," said Craig Birk, chief investment officer for Personal Capital. "The market is welcoming anything that's the opposite."
Birk said investors were glad to get some good news on trade even though talks on a NAFTA replacement will likely continue beyond the Congressional elections this fall and into 2019.
The S&P 500 index climbed 22.05 points, or 0.8 percent, to 2,896.74. The Dow Jones Industrial Average jumped 259.29 points, or 1 percent, to 26,049.64. The Nasdaq composite gained 71.92 points, or 0.9 percent, to 8,017.90. The Russell 2000 index of smaller-company stocks added 2.73 points, or 0.2 percent, to 1,728.41.
Among automakers, GM gained 4.8 percent to $37.69 and Ford rose 3.2 percent to $9.99.
Construction equipment maker Caterpillar rose 2.8 percent to $142.04 and chemicals maker DowDuPont gained 2.3 percent to $70.81.
Alphabet, Google's parent company, climbed 1.6 percent to $1,256.27. Online retailer Amazon rose 1.2 percent to $1,927.68.
Among Chattanooga area companies, the Dalton, Georgia-based Shaw Industries enjoyed the biggest gain Monday with its stock up nearly 21 percent, or 30 cents, to close at $1.75 per share.
Rising trade tensions are one reason the dollar has been climbing this year, and word that a revision of the NAFTA deal could be coming sent the dollar lower on Monday. The U.S. currency fell to 1.2965 Canadian dollars from 1.3029 late Friday and to 18.7338 Mexican pesos from 18.9249. The dollar also fell to 111.10 yen from 111.20 yen. The euro rose to $1.1680 from $1.1625.
The benchmark S&P 500 has risen for seven of the last eight weeks following strong corporate earnings and growing optimism the U.S. would work out its differences with several major trading partners. The S&P 500 is up 6.6 percent since the end of June, and, like the Nasdaq and Russell, it's trading at all-time highs.
Tesla fell 1.1 percent to $319.27 after CEO and top shareholder Elon Musk said over the weekend that the electric car maker will remain a publicly traded company. Musk wrote in a Friday blog post that he gave up on a plan to take the company private, partly because investors didn't support it.
European stocks rose after a major economic survey in Germany, the Ifo institute index, came in stronger than analysts expected. Germany's DAX rose 1.2 percent while the CAC 40 in France was 0.9 percent higher. British markets were closed for a summer bank holiday.
Japan's benchmark Nikkei 225 index added 0.9 percent and South Korea's Kospi rose 0.3 percent. Hong Kong's Hang Seng jumped 2.2 percent.