S&P 500, Nasdaq Eye Record Open As China Data, Trade Deal Lift Mood

The S&P 500 and Nasdaq were set to open at record highs on Monday as upbeat data from China and cooling trade tensions lifted sentiment, while production concerns related to Boeing’s grounded jet looked set to cap gains on the Dow.

Boeing Co (BA.N), which normally benefits from trade talk progress, fell 3.6% premarket on reports the planemaker was considering whether to cut or halt production of its grounded 737 MAX aircraft.

The stock missed out on a broader rally, spurred by data that showed China’s industrial output and retail sales growth accelerated in November, adding to the fillip from reports of an initial U.S.-China trade deal on Friday.

The deal suspended U.S. tariffs on $160 billion worth of Chinese imports scheduled to take effect on Dec. 15 and reduced some duties in exchange for increased purchases of U.S. agricultural, manufactured and energy products by Beijing.

“This deal could be the start of a series of phased rollbacks (in tariffs), which could unlock further upside for equity markets, driven by an improvement in business confidence and a recovery in investment,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.

All three major U.S. stock indexes hit record highs in the previous session after the world’s top two economies announced the much-awaited “phase one” agreement, but ended largely flat as investors looked for clarity on the actual text of the pact.

On Sunday, U.S. Trade Representative Robert Lighthizer said the deal was “totally done”, but there would be some routine “scrubs” to the text and that the date to formally sign the agreement was still being determined.

Shares of Apple Inc (AAPL.O), among the biggest companies to benefit from the deal, rose 0.7%. Chipmakers that make the components for its iPhones also gained.

At 8:51 a.m. ET, Dow e-minis 1YMcv1 were up 75 points, or 0.27%. S&P 500 e-minis EScv1 were up 17.25 points, or 0.54% and Nasdaq 100 e-minis NQcv1 were up 51.25 points, or 0.60%.

The benchmark S&P 500 index .SPX is on track for its best annual performance since 2013, boosted partly by three interest rate cuts by the Federal Reserve and encouraging economic data.

Shares of International Flavors & Fragrances Inc (IFF.N) fell 6.1% after it said it would merge with DuPont Inc’s (DD.N) $26.2 billion nutrition & biosciences unit. DuPont’s shares rose 4.5%.

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