Dow, S&P, Nasdaq hit fresh records

Trade deal progress and economic data lift stocks

Major U.S. stock indexes notched small gains but enough to secure another round of fresh records on Tuesday as optimism about major U.S. trade deals and an uptick in manufacturing and housing overpowered concerns about Boeing's decision to halt production of a top-selling plane and Britain's breakup with the European Union.

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TickerSecurityLastChangeChange %
I:DJIDOW JONES AVERAGES26958.17+195.04+0.73%
SP500S&P 5003262.91+25.99+0.80%
I:COMPNASDAQ COMPOSITE INDEX10742.262142+109.28+1.03%

Markets got a big boost in confidence after the U.S. and China announced a long-awaited “Phase 1" trade deal, alleviating concerns that tariffs from a months-long trade war would drive supply costs even higher and further curb global growth.

Wall Street also benefited from House Democrats' plans to move forward with the passage of the U.S.-Mexico-Canada trade agreement, the Trump administration's overhaul of the Clinton-era NAFTA.

Additionally, new data showed U.S. industrial production snapping back last month, posting the biggest gain in more than two years after the end of a strike at General Motors. The figure -- which includes output at factories, mines and utilities -- rose 1.1% in November, reversing a 0.9% drop in October and recording the biggest jump since October 2017, according to the Federal Reserve.

A major driver was the 12.4 percent surge in the production of cars, trucks and auto parts. The GM strike ended in late October, and both the Detroit carmaker and rival Fiat Chrysler inched higher. Additionally, Ford announced it will invest over $1.45 billion in Michigan which will create 3,000 jobs.

TickerSecurityLastChangeChange %
GMGENERAL MOTORS COMPANY29.17-0.17-0.58%
FFORD MOTOR COMPANY6.67+0.04+0.60%
FCAUFIAT CHRYSLER AUTOMOBILES N.V.12.13+0.17+1.38%

And there was more strong data on the U.S. housing market, with permits rising 1.4 percent in November to a 12 1/2 year high, while starts jumped 3.2 percent. Both are sign of future demand.

TickerSecurityLastChangeChange %
TOLTOLL BROTHERS47.88+0.84+1.79%
LENLENNAR78.33+2.03+2.66%
PHMPULTE CORPORATION44.58+0.77+1.76%

Overnight on Wall Street, the S&P 500 and Nasdaq notched all-time highs for the third straight trading day. The Dow Jones Industrial Average bested its last record high set in late November, giving President Trump more ammunition in his fight against impeachment by House Democrats.

Still, the chief executive continued to urge Fed Chairman Jerome Powell to lower interest rates further. The central bank indicated last week that rates were likely to remain at current levels next year, and Trump has long urged the loosest monetary policy possible.

Lowering interest rates might temporarily compound the economic benefits of progress on Trump's signature trade deals.

The U.S. and China agreed to cut tariffs on some of each others' goods and postpone other tariff threats, the first time the two countries have stepped back from the brink in their 17-month trade fight. In return, China promised to ramp up its purchases of U.S. agricultural products, energy and other goods and to stop forcing U.S. companies to turn over technology as a condition of doing business in that country.

The trade pact alleviated some uncertainty, though many issues remain unresolved.

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“As long as both sides continue to talk up the phase one agreement, then Santa may well deliver the end-of-December rally that every investor craves this time of year. We just have to hope that we're not getting overly excited about an exquisitely wrapped lump of coal," Craig Erlam of Oanda said in a commentary.

Stronger-than-forecast Chinese retail sales and factory activity in November have contributed to the festive mood.

BOEING TO SUSPEND 737 MAX PRODUCTION IN JANUARY

Trade elation was curbed, however, by planemaker Boeing's decision to halt the output of its top-selling 737 Max, the airliner grounded after two overseas crashes that killed more than 300 people. Southwest Airlines, which relies solely on single-aisle 737s, cut the newest model from its flight schedules through April.

The planemaker's shares fell early in the session before curbing losses.

TickerSecurityLastChangeChange %
BABOEING COMPANY146.92-4.23-2.80%
LUVSOUTHWEST AIRLINES CO.36.64-0.92-2.44%
UALUNITED AIRLINES HLDG.32.70-0.38-1.13%
AALAMERICAN AIRLINES GROUP INC.11.72-0.21-1.74%

In Asia, Japan's benchmark Nikkei 225 added 0.5% to finish at 24,066.12, while South Korea's Kospi gained 1.3% to 2,195.68. Hong Kong's Hang Seng added 1.1% to 27,805.60, and the Shanghai Composite stood at 3,022.42, up 1.3%. Australia's S&P/ASX 200 was little changed at 6,847.30.

A more sober appraisal of the future of Brexit has dampened global investors' spirits somewhat, particularly in Europe. After market rallies since last week's British election result, stockholders appeared spooked somewhat by reports that Prime Minister Boris Johnson wants to set up a law ruling that a trade deal with the European Union must be struck by the end of the year.

The move would create another deadline that will hang over markets after Britain leaves the EU on Jan. 31, as scheduled.

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