Dow surges 669 points as trade war fears cool

Wall Street got over its trade war fears for a day.The Dow surged 669 points - its third-biggest point gain in...

Posted: Mar 27, 2018 8:35 AM
Updated: Mar 27, 2018 8:35 AM

Wall Street got over its trade war fears for a day.

The Dow surged 669 points - its third-biggest point gain in history - and had its best day in two and a half years. Investors were cheered by signs that the United States and China are talking behind the scenes to avoid a clash between the world's two biggest economies.

It was a sharp reversal after the stock market's worst week in two years. The Nasdaq gained 3.3% and the S&P 500 climbed 2.7%.

The Dow's gain of 2.8% was its biggest since August 2015. The only bigger point gains on record were in October 2008, during the financial crisis.

Related: Wall Street's head-spinning reaction to trade headlines

The Wall Street Journal reported late Sunday that the United States and China started quietly negotiating to expand US companies' access to Chinese markets. The Journal reported that Treasury Secretary Steven Mnuchin was weighing a trip to Beijing to pursue the negotiations.

A Treasury Department spokesperson declined to confirm the report.

"We're not afraid of a trade war, but that's not our objective," Mnuchin said in an interview Sunday on Fox News. "We are going to proceed with our tariffs ... we're also working on investment restrictions," Mnuchin said. "But we are simultaneously having negotiations with the Chinese to see if we can reach an agreement."

Related: The US and China are in talks to try to avoid a trade war

Investors were encouraged by the discussions. Stocks took a beating last week after President Trump announced plans to impose new tariffs on about $50 billion of Chinese goods in retaliation for alleged Chinese intellectual property theft.

The Dow plummeted more than 1,100 points on Thursday and Friday, slipping into a correction - a decline of 10% from the index's all-time high in January. The Dow, S&P 500 and the Nasdaq suffered their biggest weekly losses since January 2016.

China also hit back on Trump's earlier aluminum and steel tariffs by threatening its own tariffs on about $3 billion worth of imports of US goods, including pork, fruit and wine.

Related: China may target American cherries, pistachios and sparkling wine

"The market thinks the tariffs are a trading tactic rather than a hardcore stance," said Sam Stovall, chief investment strategist at CFRA Research.

The "trade tiff" failed to dent the strong global economic outlook, Stovall said. "A sharp V recovery may not be all that surprising."

John Lynch, chief Investment strategist for LPL Financial, believes trade tensions could flare in the coming months, but the longterm risks to the market remain in check.

"When push comes to shove, we expect limited economic impact and manageable disruption to the supply chains of US companies," he said.

Twenty-nine of 30 companies on the Dow gained Monday. Microsoft led the way, gaining more than 7%. A Morgan Stanley analyst report said the company could top $1 trillion in market value within a year, powered by its cloud computing services.

The bond market also rallied from the cool down in US-China tensions.

The 10-year Treasury yield climbed to 2.83%. Last week, the 10-year yield fell sharply to 2.81% last week as investors sought safe haven from volatile stocks. Yields move opposite to prices.

-CNNMoney's Matt Egan and Jethro Mullen contributed to this story.

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Ramsey2698110
Stearns199512
Nobles14963
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Dakota120249
Olmsted58210
Washington57630
Kandiyohi4761
Rice4232
Clay41625
Scott3832
Todd2960
Wright2801
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Sherburne2222
Carver1892
Benton1733
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Blue Earth1261
Martin1265
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Freeborn1020
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Red Lake40
Redwood40
Clearwater30
Traverse30
Lac qui Parle30
Grant30
Houston20
Roseau20
Hubbard10
Lake10
Kittson10
Stevens10

Iowa Coronavirus Cases

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Confirmed Cases: 18559

Reported Deaths: 506
CountyConfirmedDeaths
Polk3930118
Woodbury267232
Black Hawk172443
Linn94176
Marshall88215
Dallas87517
Buena Vista7020
Johnson6078
Muscatine54941
Wapello5456
Crawford4892
Tama40026
Scott35210
Louisa34210
Dubuque33418
Jasper25816
Pottawattamie2348
Sioux2130
Washington1858
Wright1450
Allamakee1204
Plymouth1191
Warren1160
Story991
Mahaska918
Poweshiek898
Bremer676
Henry671
Clinton601
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Boone570
Taylor490
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Benton391
Monroe385
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Iowa350
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Buchanan320
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Hamilton290
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Hardin160
Hancock160
Humboldt150
Butler150
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Keokuk140
Greene130
Clay130
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Cass110
Jackson110
Page110
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Union70
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Mitchell50
Ringgold40
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