DOW surges as worries of trade war ease
Just released: 2018-03-05
Stocks rose on Monday, erasing earlier losses, as worries about a potential trade war waned.
The Dow Jones industrial average traded 300 points higher by mid-afternoon after dropping as much as 150 points. Caterpillar was the biggest contributor of gains to the Dow, rising 3.2 percent.
The S&P 500 rose 1 percent after trading lower earlier in the session, with utilities and real estate as the best-performing sectors. Harley-Davidson, a closely watched stock amid the tariff news, rose more than 2 percent. The Nasdaq composite advanced 1 percent.
"Seeing Caterpillar and Harley-Davidson trade higher tells me that traders think this will end diplomatically," said Quincy Krosby, chief market strategist at Prudential Financial. She also noted that the President Donald Trump's comments on NAFTA showed "flexibility" on his part.
Trump appeared to be opening the door for negotiations on tariffs. In a series of tweets Monday morning, Trump said: "Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed," adding that "Mexico must do much more on stopping drugs from pouring into the U.S. They have not done what needs to be done."
Also, House Speaker Paul Ryan said he was "extremely worried" about Trump's trade plan. Congressional leaders will not rule out potential action if Trump decides to move forward with his tariff plan.
Trump announced last week the U.S. will implement a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports. The news sparked fears of a potential global trade war as world leaders condemned the announcement. In response to the U.S. tariffs, the European Union proposed tariffs on Harley-Davidson bikes and other U.S. products.
"We're in an uncertainty zone with investors asking: 'What's going on?' with regards to protectionism and trade," said Mike Bailey, director of research at FBB Capital Partners. "The first instinct seems to be risk-off as people buy into the bond proxies like utilities."Read More...