Renewed U.S.-China trade optimism sends stocks soaring.
The U.S. stock market surged on Friday, with the Dow climbing as much as 500 points amid reports that the United States and China were making progress towards a new trade deal.
All of Wall Street’s major indices finished sharply higher in the final session of the week. The Dow Jones Industrial Average (NYSEARCA:DIA) surged 319.92 points, or 1.2%, to close at 26,816.59.
The much broader S&P 500 Index (NYSEARCA:SPY) gained 1.1% to 2,970.26. Eight of 11 primary sectors reported gains, with industrials and materials surging more than 1.9% apiece. Communications, information technology, financials and energy stocks also outperformed.
Surging tech stocks propelled the Nasdaq Composite Index (NYSEARCA:QQQ) sharply higher. The index rallied 1.3% to finish at 8,057.04.
A measure of implied volatility known as the CBOE VIX (NYSEARCA:VXX) plunged on Friday, as calm returned to Wall Street. The so-called “fear index” touched a session low of 15.49 on a scale of 1-100 where 20 represents the historic average. It would eventually settle down 8.2% at 16.13.
The United States and China have reached a substantial “phase on” trade deal, President Trump announced Friday, easing tensions between the two superpowers that have dragged on for more than a year. The potential deal includes the U.S. holding tariffs on Chinese goods at 25% in exchange for Beijing agreeing to buy more agricultural products.
The Final Word: The U.S.-China trade deal looks more like a pause in the tariff war. It remains to be seen whether both sides can tackle some of the more pressing issues, including Chinese industrial policies and government subsidies.