Stocks surge on US-China trade talks, tentative budget deal

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Stocks rise on Trump border deal

BMO Capital Markets’ Brian Belski says the markets is in dire need of some relief.

Stocks rose in a broad-based rally Tuesday after lawmakers reached a budget agreement in principle to avert another partial government shutdown while optimism grew for a resolution to the U.S.-China trade dispute.

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Despite congressional negotiators reaching a tentative funding deal, it was unknown if President Trump was on board with the deal as congressional aides said it did not contain the full amount of money he wanted for a border wall.

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He is reportedly "not thrilled" with the deal, which funds 55 miles of a wall along the nation's southern border, but by the time of the closing bell the president had not outright rejected the deal.

The U.S.-China trade talks, which include U.S. Trade Representative Robert Lighthizer, continue in Beijing as both sides attempt to strike a deal before the March 1 deadline, when additional U.S. tariffs on Chinese imports are set to be hiked.

TickerSecurityLastChange%Chg
I:DJIDOW JONES AVERAGES26572.25+61.20+0.23%
SP500S&P 5002918.34+10.37+0.36%
I:COMPNASDAQ COMPOSITE INDEX8067.151228+51.89+0.65%

However, expectations now are that the March 1 deadline, when tariffs on around $200 billion of Chinese goods are supposed to be raised to 25 percent from 10 percent, could be extended.

Besides the budget and trade negotiations, the stock market got a boost from industrial and consumer company shares. Investors' risk-on sentiment slashed Wall Street's so-called "fear guage" to a 2019 low.

TickerSecurityLastChange%Chg
BABOEING COMPANY374.99-0.18-0.05%
MMM3M COMPANY217.99-0.55-0.25%
CATCATERPILLAR INC.141.97-0.41-0.28%
FLRFLUOR CORP41.06-0.29-0.70%

Just over two-thirds of the companies in the S&P 500 are out with their October-through-December results. So far earnings and revenue are coming in comfortably above expectations, although a number of firms guiding estimates lower for the current quarter has investors concerned.

Shares of tech giants, which stand to be major beneficiaries of a U.S.-China trade deal, also posted big gains.

TickerSecurityLastChange%Chg
GOOGLALPHABET INC.1,265.00+11.24+0.90%
AMZNAMAZON.COM INC.1,908.68+21.37+1.13%
INTCINTEL CORPORATION58.91+0.10+0.16%
MSIMOTOROLA SOLUTIONS145.07+0.95+0.66%

In economic news, U.S. job openings increased by 169,000 in December to record 7.33 million, according to the Labor Department. December marked the 10th consecutive month where the number of jobs that need to be filled exceeded the number of available workers.

Oil prices gained nearly 3 percent supported by OPEC-led production cuts, which Saudi Arabia said it would surpass by more than half a million barrels per day, and by U.S. sanctions against Iran and Venezuela.

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In Asian markets on Tuesday, China’s Shanghai Composite gained 0.7 percent, Hong Kong’s Hang Seng index rose 0.1 percent and Japan’s Nikkei rallied 2.6 percent as trading resumed following Monday’s holiday.

In Europe, the major markets closed higher. London’s FTSE added 0.1 percent, Germany’s DAX gained 1 percent and France’s CAC closed up 0.8 percent.

FOX Business' Ken Martin contributed to this report.