Stocks extend upside potential after U.S. and China avoid trade war.
The U.S. stock market extended its relief rally on Monday after Mexico agreed to stem the flow of illegal immigrants into the United States in a comprehensive agreement that will be announced soon, according to President Donald Trump.
All of Wall Street’s major indices reported gains Monday, with the Dow Jones Industrial Average (NYSEARCA:DIA) rallying to new monthly highs. The blue-chip index rose 78.74 points, or 0.3%, to 26,062.68.
The broad S&P 500 Index (NYSEARCA:SPY) advanced 0.5% to close at 2,886.73, with most major sectors reporting gains. Technology, financials and the consumer discretionary component each rose by at least 0.9%.
Meanwhile, the technology-focused Nasdaq Composite Index (NYSEARCA:QQQ) surged 1.1% to 7,823.17.
A measure of implied volatility known as the CBOE VIX (NYSEARCA:VXX) edged down slightly on Monday, as calm returned to the financial markets. The so-called “fear index” fell 1.8% to 16.00 on a scale of 1-100 where 20-25 represents the historic average.
Mexico has agreed to expand border programs to ensure that more asylum seekers don’t pour into the United States illegally. The deal, which was reached late Friday, averts a trade war between the two countries after President Trump threatened 5% tariffs on Mexican imports.
On Monday, Trump tweeted that a second component of the immigration deal will be revealed “in the not too distant future.”
The Final Word: Investors are breathing a collective sigh of relief after the Trump administration managed to avoid opening up another front in its global trade war. The immigration deal is also a major win for the president, who has vowed to hold Mexico accountable for its porous border patrol.