Stock Market News For Aug 28, 2018

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Wall Street closed sharply higher on Monday as investors welcomed the new trade deal between the United States and Mexico. The broad-based market rally has enabled all three major stock indexes to end in the green for the second straight session. Automobile makers were the primary beneficiaries of yesterday's market rally.

The Dow Jones Industrial Average (DJI) closed at 26,049.64, gaining 1% or 259.29 points. The S&P 500 Index (INX) was up 0.8% to close at 2,896.74. The Nasdaq Composite Index (IXIC) closed at 8,017.90, increasing 0.9%. A total of 6.19 billion shares were traded on Monday, lower than the last 20-session average of 6.27 billion shares. Advancers outnumbered decliners on the NYSE by 1.80-to-1 ratio. On the Nasdaq, advancers had an edge over decliners by 1.29-to-1 ratio. The CBOE VIX increased 0.3% to close at 12.03.

How Did the Benchmarks Perform?

The Dow ended in positive territory for second straight trading day with 26 components of the 30-stock blue-chip index closing in the green while four finished in the red. Notably, the blue-chip index has climbed out of the correction territory which it entered on Feb 8. This was the second largest stint of correction territory in Dow's history. The index closed above 26,000 for the first time since Feb 1.

The S&P 500's gain was led by an increase of 1.4% in Financials Select Sector SPDR (XLF), a rise of 1.3% in both Materials Select Sector SPDR (XLB) and Industrials Select Sector SPDR (XLI) and 1% gain in Communications Services Select Sector SPDR (XLC). Notably, nine out of 11 sectors of the benchmark index closed in the green while two ended in the red.

The tech-heavy Nasdaq Composite ended above 8,000 for the first time in its history buoyed by strong performance of large-cap tech stocks. For the first time since 1999, the tech-laden index recorded second 1,000 points advancement in a year.

Trade-Related Concerns Eased

On Aug 27, President Donald Trump announced that the United States and Mexico have reached an agreement to enter into a new trade deal. The new deal would be called "The United States-Mexico Trade Agreement" and will replace the 24-year old "North American Free Trade Agreement" (NAFTA) which was formulated between the United States, Mexico and Canada.

Notably, Canada's Foreign Minister Chrystia Freeland, is scheduled to reach Washington on Aug 28 to resume talks between the two neighbors to formulate a new agreement replacing NAFTA. In fact, Canada is the second largest trading partner of the United States after China.

Trading relationship between the United States, Canada and Mexico took a hit on Jun 1, when the Trump administration imposed 25% tariff on imported steel and 10% tariff on imported aluminum from the two neighboring countries. Notably, the new U.S. - Mexico deal has to be approved by the U.S. Congress before being implemented.

Auto Industry Leads Market Rally

Although the details of the U.S. - Mexico trade deal is yet to be made public, market participants generally believe that the U.S. automobile industry will largely benefit from the deal. Trump stated that the deal with Mexico will be a boon for auto manufacturers.

Consequently, share price of General Motors Co. GM , Ford Motor Co. F and Fiat Chrysler Automobiles N.V. FCAU were up 4.8%, 3.2% and 4.8%, respectively. General Motors carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Stocks That Made Headline

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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