U.S. stocks rose on Monday, following a sharp sell-off in the prior session, after U.S. President Donald Trump predicted a trade deal with China, cooling investor concerns after a ramp-up in rhetoric derailed markets last week.
Following the G7 summit of world leaders in Biarritz, France, Trump said he believed China was sincere about the desire to reach a deal, citing what he described as increasing economic pressure on Beijing and job losses there.
Shares of tariff-sensitive companies rose in response. Apple Inc’s 1.9% gain provided the biggest boost to each of the major indexes.
Chipmakers, which are heavily reliant upon China for revenue, also rose. The Philadelphia Semiconductor index added 0.86% after slumping more than 4% on Friday.
Still, market participants said the rebound paled in comparison to last week’s decline, and they expected recent volatility to continue.
“The markets are telling us something very important with this pricing action today. We are seeing some gains across the board for the Nasdaq S&P and Dow, but we are also seeing a very significant downtick in volume,” said Peter Kenny, founder of Kenny’s Commentary LLC and Strategic Board Solutions LLC in New York.
“This is not a healthy bounce and it is across virtually all the major indexes. So it is an indication the momentum for U.S. equities remains biased to the downside,” Kenny said.
The Dow Jones Industrial Average rose 269.93 points, or 1.05%, to 25,898.83, the S&P 500 gained 31.27 points, or 1.10%, to 2,878.38, and the Nasdaq Composite added 101.97 points, or 1.32%, to 7,853.74.
In Canada, the S&P/TSX composite index closed up 61.21 points at 16,098.79 after losing almost 216 points on Friday. The TSX’s energy group rose 0.27 points, or 0.2%, while the financials sector climbed 1.28 points, or 0.4%.
Leading the index were Bombardier Inc, up 5.7%, Shopify Inc, up 3.1%, and Gran Tierra Energy Inc , higher by 2.5%. Lagging shares were CannTrust Holdings Inc , down 4.4%, Cascades Inc, down 4.2%, and Nexgen Energy Ltd, lower by 3.8%.
Commerce Department data showed new orders for key U.S.-made capital goods rose modestly in July, while shipments fell by the most in nearly three years. The data could provide the Federal Reserve with more fuel to cut interest rates again when policymakers meet next month.
Concerns about the global economy slipping into recession and uncertainty over the pace of U.S. interest rate cuts have created some anxiety about how long the current U.S. expansion will last. The S&P 500 is off more than 5% from the record high hit in late July after suffering its longest run of weekly declines since May.
Even with Monday’s broad gains, with each of the major S&P 500 sectors rising, Wall Street’s fear gauge, the CBOE Volatility index, hit its highest level in more than a week earlier in the session.
With files from Reuters