US stocks closed up on Monday, as a resurgence in deal-making activity and the success of trade talks between the U.S. and China pushed shares up.
The Dow Jones Industrial index led the charge, climbing 298 points to 25,013, with the help of Boeing, United Technologies, Caterpillar and General Electric.
With a 3.6% advance, Boeing was the Big Board’s best performer on the back of the easing of trade tensions between the world’s two largest economies.
The aerospace group is one of the US’s largest exporters and China is a pivotal market, so its investors were pleased by the succesful progression of China-US trade negotiations.
Earlier today, Steve Mnuchin told the business channel CNBC that the U.S. has made "very meaningful progress" with China on trade matters since trade talks kicked off last week.
General Electric also finished up 1.9% as investors applauded its move to merge its rail road business with its rival Wabtech in an $11bn deal.
In other deal news, Fifth Third Bancorp reached an agreement to buy its smaller rival MB Financial of Chicago for US$4.7bn. In response MB Financial’s stock finished up 12.9% at US$49.28.
The S&P 500, meanwhile, added 20 points to 2,733, led by a 6% jump in Range Resources and a 4.2% rise in Kimco Realty Group.
Elsewhere, the tech-heavy Nasdaq jumped 39.7 points to 7,394, with Micron Technology finishing 3.9% higher after projecting better fiscal third-quarter results.
2:30 PM: Deal activity and waning worries about US-China trade talks are still pushing US stocks higher
The Dow Jones Industrial index moved higher in afternoon trade Monday, adding 314 points to trade above 25,000 for the first time since March.
Deal activity and waning fears about the US-China trade talks still pushed stocks higher, with the S&P 500 adding 21 points to 2,734.
On the acquisition trail, another merger hitting share prices was Fifth Third Bancorp’s acquisition of its smaller rival MB Financial of Chicago for US$4.7bn.
In response, MB Financial’s (NASDAQ:MBFI) shares rose 13.2% to US$49.42 in afternoon trade while Fifth Third Bancorp dipped 7.8% to US$30.95.
The tech-heavy Nasdaq rose 37 points to 7,392, led by Micron Technology’s 4% jump thanks to the chip maker offering a brighter outlook for its fiscal third-quarter earnings.
10 AM: US benchmarks open higher as trade tensions between the US and China ease
US indices opened on the front foot, with the Dow Jones Industrial index leading the charge with a 300 point gain in early trade as investors’ fears about a trade battle between the U.S. and China faded.
Early in the trading session, the Big Board pared down some of its gains, but still managed to add 276 points, led higher by Intel, General Electric, Boeing and Caterpillar, which all posted gains of more than 2%.
General Electric, which traded 3.2% higher, continued to be the darling of the market after agreeing to merge its transportation business with Wabtec, in a deal worth US$11.1bn.
Boeing shares were also in favor, rising 3% on the announcement that Zunum Aero, a startup it backs, will unveil its first hybrid electric plane in a few years to the charter airline JetSuite.
Elsewhere, the S&P 500 added 20 points to 2,733 while the tech-laden Nasdaq picked up 69 points to 7,423, helped by shares in semiconductor companies.
The Russell 2000 index of small-cap stocks, which has been on a tear of late, also added 9 points to hover at 1,636.
The trade talks between the US and China, which kicked off last week, are reported to be fruitful.
Steve Mnuchin, the US Treasury secretary, is suggesting that a trade war between the world’s two largest economies is not imminent. The U.S. has agreed to abandon the US$150bn it had threatened to impose on Chinese imports. China, in turn, will buy an array of U.S. services and goods, which will help to plug the trade deficit.
Under our potential deal with China, they will purchase from our Great American Farmers practically as much as our Farmers can produce.
— Donald J. Trump (@realDonaldTrump) May 21, 2018
7:50 AM : General Electric Company surges on merger news; Qudian Inc lower
In pre-market movers Monday, General Electric Company (NYSE:GE) was the standout story.
Shares added 1.9% to US$15.26 before the bell as reports emerged that the conglomerate was preparing and nearing a merger between its transportation business with rail equipment maker Westinghouse Air Brake Technologies Corp (NYSE:WAB), or Wabtec, in a huge US$20 billion deal that could come within days.
Reuters carried the story at the weekend and aid the deal could be the biggest move under new GE chief John Flannery.
EXCLUSIVE: General Electric nears deal to merge its transportation business with Wabtec - sources https://t.co/2ZdmsW9Wj5 by @HarryBrumpton @GregRoumeliotis $GE $WAB pic.twitter.com/G75LQRElKB
— Reuters Business (@ReutersBiz) 21 May 2018
GE's transportation business reported US$1.5bn in new orders in the three months to end March, up 46% from the same period last year, and notched sales of US$872mln.
Wabtec (NYSE:WAB) shares are up 5% in pre-market to US$100.
Elsewhere, Qudian Inc (NYSE:QD) shares shed 4.18% to US$11 in pre-market after the provider of online small consumer credit products in China posted first-quarter numbers.
Net income decreased by 32.1% to RMB315.8 million (US$50.3mln) from RMB465.1mln in the three months, on revenues, which were higher at RMB1,716.6 million (US$ 273.7mln), representing an increase of 105.6% on the same period last year.
Elsewhere, Tesla Inc (NASDAQ:TSLA) shares are up 1.79% in pre-market at US$282.06 as CEO Elan Musk confirmed last night the timing for the car marker's next generation of fast-charging technology, dubbed the Supercharger V3.
Also, in pre-market today, Envision Healthcare Corp (NYSE:EVHC) added 3.33% to US$43.40 after it emerged last Friday that hospital operator HCA Healthcare and private-equity firm KKR were joining forces to make an offer for Envision.