(Reuters) – Trade-sensitive industrial and technology stocks pushed Wall Street higher on Monday after the United States and China agreed on a temporary trade truce, hopes of which had driven the market last week to post its biggest gain in nearly seven years.
Washington and Beijing agreed to a 90-day trade ceasefire at the G20 summit in Argentina on Saturday and U.S. President Donald Trump said China had agreed to cut import tariffs on American-made cars.
However, the White House also said that the existing 10 percent tariffs on $200 billion worth of Chinese goods would be lifted to 25 percent if no deal was reached within 90 days.
Still, the ceasefire was enough to boost S&P technology .SPLRCT up 1.55 percent and industrials .SPLRCI 1.03 percent, both sectors that have borne the brunt of the escalating trade dispute.
Apple Inc (AAPL.O), recently hit by worries over possible tariffs on iPhones, rose 2.1 percent. Trade bellwethers Caterpillar Inc (CAT.N) and Boeing Co (BA.N) were up 2.9 percent and 3.6 percent, respectively.
“The fact that we got something positive out of the trade discussions is enough for investors to slowly get back into market, but they are just short covering and not really buying,” said Michael Antonelli, managing director, institutional sales trading at Robert W. Baird in Milwaukee.
“Investors are cautiously optimistic, they are dipping their feet back into the water but aren’t quite jumping in.”
Amazon.com Inc (AMZN.O) jumped 4.9 percent, helping send the S&P 500 .SPX and the Nasdaq Composite .IXIC to their highest in over three weeks. But the markets pared some gains as the rally in crude oil prices tapered.
At 11:38 a.m. ET the Dow Jones Industrial Average .DJI was up about 1 percent.
Energy stocks .SPNY rose 1.6 percent as crude prices surged on the trade truce and as Canada’s Alberta province ordered a production cut. But their gains had decreased as the rally in oil prices tempered to 3 percent from about 5 percent at the open.
Trump’s tweet on lower Chinese import taxes sent General Motors Co (GM.N), Ford Motor Co (F.N) and Tesla Inc (TSLA.O) up between 1.8 percent and 3.7 percent.
Chipmakers, which have the highest revenue exposure to China, also rallied, sending the Philadelphia Semiconductor index .SOX up 2.03 percent and back into positive territory for the year.
The defensive real estate .SPLRCR, utilities .SPLRCU and consumer staples .SPLRCS sectors housed most of the laggards.
Advancing issues outnumbered decliners for a 2.16-to-1 ratio on the NYSE and a 1.53-to-1 ratio on the Nasdaq.
The S&P index recorded 34 new 52-week highs and no new lows, while the Nasdaq recorded 64 new highs and 47 new lows.
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