Technology companies and banks helped power stocks higher on Wall Street Monday as investors welcomed news that the U.S. and Mexico averted a trade war and potentially damaging tariffs.
The latest gains extend the market's winning streak to a fifth day. That follows the strongest week for stocks since November in what has been a marked turnaround for the market after escalating trade tensions fueled a turbulent skid in May.
Some of those trade jitters eased a bit Monday, at least in regard to the trade spat between the U.S. and Mexico. President Donald Trump suspended plans to impose tariffs on Mexican goods after the countries struck a deal on immigration. The dispute threatened to raise costs for American companies and consumers and expand a global trade war that already includes China.
During an interview with CNBC, Trump said Monday that he expects to meet with Chinese President Xi Jinping at the Group of 20 summit in Japan later this month. That may have given investors some cause for optimism in the dispute between Washington and Beijing, though Trump noted that an additional wave of U.S. tariffs on Chinese goods will go into effect if the Xi refuses to meet at the summit.
"Relief in trade tensions, in terms of Mexico, and hope for relief in trade tensions with China seem to be helping the market today," said Willie Delwiche, investment strategist at Baird.
The S&P 500 index gained 13.39 points, or 0.5%, to 2,886.73. The benchmark index rose 4.4% last week, its best weekly performance of 2019. It's now about 2% below its record set on April 30.
The Dow Jones Industrial Average rose 78.74 points, or 0.3%, to 26,062.68. The Nasdaq composite climbed 81.07 points, or 1.1%, to 7,823.17. The Russel 2000 index of smaller companies gained 9.17 points, or 0.6%, to 1,523.56.
Stock indexes in Europe finished broadly higher.
The latest gains build on the market's momentum from last week, when a lackluster U.S. jobs report appeared to increase the odds that the Federal Reserve will have to cut interest rates in coming months. Last week, Federal Reserve Chairman Jay Powell held out the possibility that the central bank will soon cut rates to protect the economic recovery from any damage resulting from the Trump administration's multiple trade disputes. Many analysts think the Fed will cut rates more than once before year's end, perhaps beginning in July.
"We have essentially, over five trading days, undone the preceding 19 days' worth of weakness," Delwiche noted.
Other market indicators still signal that investors are worried about the potential for an economic slowdown, however.
The yield on the 10-year Treasury note remains sharply lower from where it was at the beginning of May, before the Trump administration's tariff threats escalated trade conflicts with China and Mexico. That spooked investors, triggering a monthlong sell-off that derailed the market's strong start to the year.
"If you look beyond the S&P 500, it's not nearly as rosy a picture," Delwiche said. "You don't want to make too much of what we've seen over the past week. It's been encouraging, but it's by no means an all-clear, everything-is-OK signal."
On Monday, news of the deal between the U.S. and Mexico helped lift shares in automakers and consumer-related companies that would suffer from new tariffs on goods from Mexico. Ford rose 0.6% and General Motors gained 1.5%. Constellation Brands, which makes Corona beer, rose 1.9%.
Technology companies accounted for much of the market rally. Apple rose 1.3%. Chipmakers made some of the biggest moves, with Nvidia adding 2% and Qualcomm rising 2.7%.
Banks were also among the biggest gainers as lower bond prices pushed yields higher. The yield on the 10-year Treasury note rose to 2.14% from 2.08% late Friday. Higher yields raise banks' profits from loan interest. Bank Of America gained 2% and Citigroup rose 2.2%.
Consumer-related and internet stocks also gained ground as investors shifted into high-growth holdings and away from utilities and other safe-play sectors. Amazon climbed 3.1% and Facebook added 0.8%.
Utilities, real estate and consumer staples lagged other sectors.
Traders also cheered a couple of multibillion-dollar deals, including a merger of Raytheon and United Technologies that would create one of the world's largest defense contractors.
Raytheon is known for its missiles, including the Patriot system. United Technologies is a maker of aircraft engines, among other industrial products.
The combined company will have sales of about $74 billion, pushing it ahead of competitors including Lockheed Martin and Northrop Grumman. Raytheon shares rose 0.7%, while United Technologies dropped 3.1%.
Investors bid up shares in Tableau 33.7% after customer-management software developer Salesforce said it would buy the company in an all-stock deal valued at $15.7 billion. Salesforce fell 5.3%.
The deal comes a few days after Google said it is purchasing data analytics firm Looker for $2.6 billion in order to expand its Google Cloud business.
Energy futures finished mostly lower Monday. Benchmark U.S. crude slid 1.4% to settle at $53.26 a barrel. Brent crude oil, the international standard, closed 1.6% lower at $62.29 a barrel.
Wholesale gasoline fell 0.5% to $1.73 per gallon. Heating oil dropped 1% to $1.81 per gallon. Natural gas added 0.9% to $2.36 per 1,000 cubic feet.
Gold fell 1.2% to $1,329.30 per ounce, silver lost 2.6% to $14.64 per ounce and copper gained 1.3% to $2.66 per pound.
The dollar rose to 108.44 Japanese yen from 108.15 yen on Friday. The euro weakened to $1.1315 from $1.1338.