After moving notably higher early in the session, stocks have seen some further upside over the course of the trading session on Monday. The major averages are extending the substantial recovery rally seen over the previous week.
Currently, the major averages are their highs of the session. The Dow is up 222.55 points or 0.9 percent at 26,206.49, the Nasdaq is up 152.94 points or 2 percent at 7,895.04 and the S&P 500 is up 31.31 points or 1.1 percent at 2,904.65.
Continued buying interest has been generated in reaction to news the U.S. and Mexico have reached an agreement to avert President Donald Trump’s threatened tariffs on all Mexican imports.
Trump revealed in a post on Twitter late Friday that the 5 percent tariff he threatened to impose on Mexican imports beginning today has been “indefinitely suspended.”
The suspension of the tariff threat comes as the two countries signed a deal Trump claims will help stop the flow of migrants through Mexico and into the U.S.
“I am pleased to inform you that The United States of America has reached a signed agreement with Mexico. The Tariffs scheduled to be implemented by the U.S. on Monday, against Mexico, are hereby indefinitely suspended,” Trump tweeted.
He added, “Mexico, in turn, has agreed to take strong measures to stem the tide of Migration through Mexico, and to our Southern Border. This is being done to greatly reduce, or eliminate, Illegal Immigration coming from Mexico and into the United States.”
Details of the deal announced by the State Department indicated Mexico will take unprecedented steps to increase enforcement to curb irregular migration, including deploying 6,000 troops from its newly formed National Guard to its southern border.
However, some analysts have questioned the impact of the steps being taken by Mexico, arguing Trump threatened to derail a key economic partnership for a deal that ultimately maintains the status quo.
Trump also warned on Twitter this morning that the tariffs will be reinstated if Mexico’s legislative body does not approve an unrevealed but “very important” part of the deal.
Semiconductor stocks continue to see considerable strength in mid-day trading, with the Philadelphia Semiconductor Index soaring by 4.6 percent.
The index has shown a substantial rebound after ending the last trading day of May at its lowest closing level in nearly four months.
Significant strength also remains visible among retail stocks, as reflected by the 2.2 percent jump by the Dow Jones U.S. Retail Index. The index has reached its best intraday level in a month.
Financial, transportation, and software stocks are also seeing notable strength on the day, while gold stocks continue to buck the uptrend amid a steep drop by the price of the precious metal.
With gold for August delivery plunging $13.40 to $1,332.70 an ounce, the NYSE Arca Gold Bugs Index is down by 1.8 percent.
In overseas trading, stock markets across the Asia-Pacific region moved notably higher during trading on Monday. Japan’s Nikkei 225 Index surged up by 1.2 percent, while Hong Kong’s Hang Seng Index soared by 2.3 percent.
The major European markets also moved to the upside on the day, although the German markets are closed for a holiday. While the U.K.’s FTSE 100 Index advanced by 0.6 percent, the French CAC 40 Index rose by 0.3 percent.
In the bond market, treasuries have come under pressure following the upward move seen last Friday. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 5.9 basis points at 2.143 percent.
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