Stocks return to strength as U.S., Canada announce new free trade agreement.
U.S. stocks traded mostly to the upside on Monday, with the major indexes back near record territory after the United States and Canada salvaged their free trade agreement mere hours before a self-imposed deadline.
The large-cap S&P 500 Index (NYSEARCA:SPY) climbed 0.4% to 2,924.59, with most sectors finishing in positive territory. The Dow Jones Industrial Average (NYSEARCA:DIA) added 192.90 points, or 0.7%, to 26,651.21. Meanwhile, the technology-focused Nasdaq Composite Index (NYSEARCA:QQQ) bucked the uptrend, falling 0.1% to at 8,037.30.
A measure of implied volatility known as the CBOE VIX (NYSEARCA:VXX) edged up 0.6% to 12.19. The so-called “fear index” was little changed for the month of September.
Canada and the United States have agreed in principle on a new free trade agreement that will pick up where NAFTA left off. The new pact, called the United States Mexico Canada Agreement (USMCA), is expected to be signed in 60 days just before Mexico’s new president assumes office.
Late last night, our deadline, we reached a wonderful new Trade Deal with Canada, to be added into the deal already reached with Mexico,” U.S. President Donald Trump tweeted Monday. “The new name will be The United States Mexico Canada Agreement, or USMCA. It is a great deal for all three countries, solves the many deficiencies and mistakes in NAFTA, greatly opens markets to our Farmers and Manufacturers, reduces Trade Barriers to the U.S. and will bring all three Great Nations together in competition with the rest of the world. The USMCA is a historic transaction!”
The Final Word: With North American free trade salvaged, investors can look forward to a favorable fourth quarter. The so-called Halloween Indicator stipulates that the best six months for Wall Street usually begin on Oct. 31.