Wall Street nears record high on trade, earnings optimism

U.S. stock indexes rose to a near all-time high on Monday on optimism about the imminent signing of a preliminary U.S.-China trade deal as well as the start of the fourth-quarter corporate earnings season.

Apple Inc (AAPL.O), Facebook Inc (FB.O), Netflix Inc (NFLX.O) and Microsoft Corp (MSFT.O) were the top boosts to the S&P 500 and Nasdaq. Chipmaker Nvidia Corp (NVDA.O) rose 2.6% after bullish brokerage comments.

Google-owner Alphabet Inc (GOOGL.O) rose 0.5% and was set to cross $1 trillion in market capitalization to join Apple and Microsoft.

An easing of Middle East tensions and signs that the Phase 1 U.S.-China trade agreement, which is expected to be signed in Washington on Wednesday, have encouraged riskier bets over the last week.

Adding to the positive mood around trade, Bloomberg reported the Trump administration planned to lift its designation of China as a currency manipulator, according to people familiar with the matter.

The other major centerpiece this week will be earnings from the big banks, JPMorgan Chase & Co (JPM.N), Citigroup Inc (C.N) and Wells Fargo & Co (WFC.N), as they kick off the fourth-quarter reporting season from Tuesday.

“It’s one of those days when we’re setting up for that shift from macro to micro,” said Art Hogan, chief market strategist at National Securities in New York.

“My guess is that it (bank earnings) is going to be more good news than bad news and a lot of that is driven by the kick up in demand across the board whether it’s demand from consumers or corporates.”

Analysts expect profits at S&P 500 companies to drop 0.6% for a second straight quarterly decline, according to Refinitiv IBES data.

At 11:35 a.m. ET, the Dow Jones Industrial Average .DJI was up 57.49 points, or 0.20%, at 28,881.26, the S&P 500 .SPX was up 13.15 points, or 0.40%, at 3,278.50 and the Nasdaq Composite .IXIC was up 49.76 points, or 0.54%, at 9,228.62.

Aerospace companies Hexcel Corp (HXL.N) and Woodward Inc (WWD.O) rose 8.2% and 3.5%, respectively, after the two Boeing suppliers said they would combine in an all-stock merger valued at $6.43 billion.

Tesla Inc (TSLA.O) rose 6.3% after a report said China would not make significant cuts to subsidies for new energy vehicles (NEV) this year.

Advancing issues outnumbered decliners by a 2.05-to-1 ratio on the NYSE and a 1.38-to-1 ratio on the Nasdaq.

The S&P index recorded 46 new 52-week highs and one new low, while the Nasdaq recorded 109 new highs and 20 new lows.