Stocks surge as Trump plans to dela hike tariff on Chinese imports

U.S. stocks rose on Monday after President Donald Trump said he would delay a planned hike in tariffs on Chinese imports and that the two countries were "very, very close" to a trade deal. But Wall Street's three major indexes pulled back from session highs as investors waited for new catalysts such as an actual deal with China.

Before the market opened on Monday, Trump said he was optimistic a final trade deal could be reached with China but cautioned that an agreement may still not happen. The U.S. president's move to postpone the tariff deadline was seen as the clearest sign yet the two countries were closing in on an agreement to end their prolonged trade spat, which has slowed global growth and disrupted markets.

"The main driver for the market today is renewed optimism regarding a deal between the U.S. and China," said Adam Sarhan, chief executive officer of 50 Park Investments in New York. But gains were capped after weeks of advances for the S&P 500, the Dow Jones Industrial Average and Nasdaq, partly due to trade optimism and dovish signals from the Federal Reserve.

"It would be perfectly normal to see the market pull back a little to digest the strong move. The market is waiting for the next bullish catalyst," said Sarhan. At 2:04 p.m. EST (1904 GMT), the Dow Jones Industrial Average rose 134.83 points, or 0.52 per cent, to 26,166.64; the S&P 500 gained 10.41 points, or 0.37 per cent, to 2,803.08; and the Nasdaq Composite added 42.48 points, or 0.56 per cent, to 7,570.03.

The S&P 500 index's session high on Monday was 4.3 per cent below its record closing reached in late September. Of the S&P's 11 major sectors, financials advanced most with a 1 per cent gain as banks rose 1.4 per cent, following U.S. Treasury yields higher.

The S&P technology index was up 0.6 per cent, with the biggest boost from Apple Inc, gaining 0.7 per cent. The Philadelphia semiconductor index climbed 1.3 per cent as chip companies have a big exposure to China. The industrials sector was 0.7 per cent higher, with its biggest boost from General Electric Co, which leapt 11 per cent after announcing a sale of its biopharma business to Danaher Corp for $21.4 billion. Danaher shares rose 8.2 per cent.

The industrials sector was also helped by trade sensitive Caterpillar Inc's 2.7 per cent jump and Boeing Co's 0.9 per cent rise. Helping the risk-on sentiment was a flurry of M&A activity.

The Nasdaq Biotechnology Index was up 2 per cent with its biggest boost coming from Spark Therapeutics Inc whose shares soared 120 per cent after Swiss drugmaker Roche Holding AG agreed to buy it for $4.3 billion. Canadian miner Barrick Gold Corp offered to buy U.S. rival Newmont Mining Corp for nearly $18 billion. However, Newmont's shares dipped 0.2 per cent as the offer price was at a discount.

The biggest laggards were the S&P's defensive sectors - consumer staples, utilities and real estate. Advancing issues outnumbered declining ones on the New York Stock Exchange by a 1.40-to-1 ratio; on Nasdaq, a 1.48-to-1 ratio favoured advancers.

The S&P 500 posted 58 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 121 new highs and 13 new lows.