Stocks advanced Monday after China announced it will be cutting tariffs on hundreds of products just weeks before the planned signing of an interim trade deal with the U.S. Each of the three major indices hit fresh record closing highs.
Gains in the Dow were led by shares of Boeing (BA), which climbed nearly 3% after the airplane-maker announced CEO Dennis Muilenburg had resigned from the company after months of fall-out following two deadly crashes of the 737 Max aircraft.
Here’s where markets settled at the end of regular equity trading:
S&P 500 (^GSPC): +0.09%, or 2.79 points
Dow (^DJI): +0.34%, or 96.44 points
Nasdaq (^IXIC): +0.23%, or 20.69 points
10-year Treasury yield (^TNX): +1.2 bps to 1.929%
Gold (GC=F): +0.57% to $1,489.40 per ounce
China’s Ministry of Commerce on Monday published a list of 859 products that will be subject to temporary import tariffs, which are lower than the country’s most-favored nations rate. These lowered tariffs will take effect Jan. 1, and reduce the levies on products from frozen pork to semiconductor components and pharmaceuticals.
Contracts on each of the three major stock indices gained following the early morning announcement, with the tech-heavy Nasdaq leading advances. The Philadelphia Semiconductor Index (SOXX) advanced to a fresh record high.
China had also announced a similar tariff reduction about 12 months ago, covering 706 products.
The most recent move serves both as a signal that Beijing is making good on its promise to open up its borders to the rest of the world, and as an apparent effort to support the Chinese consumer in the midst of a pork shortage and anemic domestic economic growth.
It also comes just weeks before the U.S. and China plan to sign a phase one trade agreement in early January, with China having repeatedly called for a reciprocal reduction of tariffs as part of a path to a more lasting deal.
Meanwhile, trading volume remained light Monday amid the holiday-shortened week. On Tuesday, U.S. equity markets will close early at 1 p.m. ET, while credit markets will close at 2 p.m. ET. Both markets will be closed Wednesday in observance of the Christmas holiday.
No major corporate earnings announcements are slated for Monday.
ECONOMY: Durable goods orders unexpectedly drop in November
Orders for durable goods, or products intended to last at least three years, unexpectedly fell in November by the most since May, the Census Bureau said Monday in its preliminary monthly report.
Durable goods orders fell by 2.0% during the month, well below the 1.5% gain expected by consensus economists, according to Bloomberg data. October’s durable goods orders were downwardly revised to a 0.2% increase, from a 0.5% advance previously.
November’s declines were largely driven by a drop in defense aircraft orders, as well as a small drop in commercial aircraft orders.
Excluding transportation, durable goods orders were flat in November after a downwardly revised 0.3% gain in October. This was also short of estimates for a 0.2% uptick.
Core capital goods orders, or non-defense orders excluding aircraft, were up 0.1% in November, matching expectations and slowing from the prior month’s 1.1% increase. This measure is closely watched as a proxy for business investment. Core capital goods shipments, however, unexpectedly fell 0.3% in November versus a 0.0% reading expected, with this measure factoring into the calculation for equipment spending in GDP.
Separately, new-home sales unexpectedly rose by 1.3% in November, reaching a seasonally adjusted annual rate of 719,000, the Census Bureau said Monday. In October, new-home sales had declined by a downwardly revised 2.7% month-on-month to a seasonally adjusted annual rate of 710,000.
The median new-home price rose 7.2% to $330,800 in November versus last year. Most of last month’s sales took place in the $200,000-$400,000 range, and by geography, in the Northeast and West.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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