Stocks rallied on Friday after President Donald Trump said China and the U.S. reached the first phase of a substantial trade deal that delays tariff hikes that were set to kick in next week.
The Dow Jones Industrial Average surged 319.92 points, or 1.2% to close at 26,816.59, led by Apple which surged to an all-time high. The S&P 500 rose 1.1% to 2,970.27, while the Nasdaq Composite jumped 1.3% to 8,057.04. The gains helped the Dow and S&P 500 snap a three-week losing streak. The Dow and S&P 500 gained 0.9% and 0.6%, respectively, for the week. The Nasdaq ended the week up 0.9%.
Trump told reporters at the Oval Office that phase one of the trade deal will be written over the next three weeks. The major indexes hit their session highs on this comment, with the Dow rising more than 500 points. Trump made his comments after meeting with Chinese Vice Premier Liu He.
As part of this phase, China will purchase between $40 billion and $50 billion in U.S. agricultural products. Trump also said the deal includes agreements on foreign-exchange issues with China. In exchange, the U.S. agreed to hold off on tariff hikes that were set to take effect Tuesday.
Treasury Secretary Steven Mnuchin said both sides struck an “almost complete agreement” on currency and financial services issues. Phase two of the deal will “start almost immediately” after the first one is signed, Trump said.
President Donald Trump speaks to reporters after arriving aboard Air Force One at Joint Base Andrews, Maryland, September 26, 2019.
Jonathan Ernst | Reuters
Stocks fell off their session highs shortly before the close after U.S. Trade Representative Robert Lighthizer said a decision had not been made over additional U.S. tariffs scheduled for December.
Stocks gained earlier in the day as Trump tweeted that “good things” were happening during the talks with “warmer feelings than in recent past.”
Big Tech shares such as Facebook, Amazon and Google parent Alphabet all gained at least 0.5%. Bank stocks also gained steam, as Bank of America and J.P. Morgan Chase rose more than 1.6% each. Apple jumped 3%.
Chipmakers rose broadly. Micron Technology gained more than 4%, while Xilinx climbed 3.7%.
The U.S.-China trade war has dragged on for more than a year. In that time, the U.S. has targeted billions of dollars worth of Chinese goods with tariffs. China has retaliated with levies of its own, sparking fears of slower global economic growth and weaker corporate earnings.
Investors were eagerly awaiting constructive news on trade from China and the U.S. Michael Geraghty, equity strategist at Cornerstone Capital, is still cautious, however. “We’ve been in similar situations before, with some kind of trade agreement seemingly at hand, but then the talks collapse,” said Geraghty. “That’s, in part, reflecting our mercurial president.”
— CNBC’s Sam Meredith contributed to this report.