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The record-setting rally in U.S. equities accelerated in the wake of Wednesday’s China trade deal and signs consumer demand remains strong. Bond yields rose.
All three main U.S. stock benchmarks surged to all-time highs after setting multiple records earlier this week, with technology and financial shares leading the surge. Alphabet Inc.’s market valuation hit $1 trillion for the first time. Banks and chipmakers rallied after solid earnings reports from Taiwan Semiconductor Manufacturing Co. and Morgan Stanley. Treasuries fell after data showed U.S. retail sales strengthened in December, while the dollar gained.
“The consumer is really in positive shape,” said Ryan Detrick, senior market strategist at LPL Financial. “Then when you factor in the alleviation of the U.S.-China tensions, the market is in a pretty good spot.”
The Senate approved President Donald Trump’s U.S.-Mexico-Canada free trade agreement, handing the president a major political win on the same day senators were sworn in as jurors in his impeachment trial.
The formal signing of a phase one deal between the world’s two biggest economies has put the trade war on hold as far as many investors are concerned. Assuming the detente lasts, traders will be seeking fresh catalysts, most likely in economic data and the ramp-up of earnings season.
“The question is if we can keep up the momentum,” said Mike Loewengart, vice president of investment strategy at E*Trade Financial. “Up next, housing, an economic bellwether, which will provide yet another data point of how our economy closed out the year.”
West Texas crude fluctuated in a narrow range before pushing higher.
Elsewhere, the Stoxx Europe 600 Index closed at a record high after swinging between gains and losses. The euro erased earlier gains, while most European bonds edged up. The ruble slipped in the wake of Russian President Vladimir Putin’s call for sweeping constitutional changes and subsequent replacement of his long-serving prime minister.
Meanwhile, soybeans slumped overnight after China signaled purchases would be based on demand, rather than a pre-set amount.
Here are some events to watch for this week:
- China GDP, along with key monthly data for December, come on Friday.
- A final reading on the euro-zone’s December inflation is also due on Friday.
There are some of the main moves in markets:
--With assistance from Cecile Gutscher.
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