Stocks are mixed and S&P 500 hovers near record high as Washington and Beijing discuss trade
US stocks were mixed on Monday and the S&P 500 approached an all-time high as trade talks between the US and China kicked off in London.
The Dow fell 75 points. The broader S&P 500 was flat and the tech-heavy Nasdaq Composite gained 0.15%. Stocks were relatively unchanged as investors monitored developments from the trade talks.
The S&P 500 on Friday hit its highest level since February and was less than 2.4% away from hitting a new record high.
The Dow, S&P 500 and Nasdaq are coming off of back-to-back weeks of gains. The US stock market has steadily rallied in the last two months as President Donald Trump has softened his initial plan for sweeping tariffs. After the S&P 500 tumbled to the precipice of a bear market in early April, the index has rallied more than 20%.
'Markets have moved higher on tariff postponement and the perception that they will be more moderate than initially announced,' said Richard Saperstein, chief investment officer at Treasury Partners. 'We expect markets to remain headline sensitive, as trade deals take time to negotiate and unsettling tariff news is likely to cause noticeable volatility.'
Wall Street last week rallied on optimistism about a potential thaw in trade tensions between the United States and China. The meeting on Monday between representatives from Washington and Beijing comes after Trump and Chinese President Xi Jinping spoke by phone on Thursday.
The S&P 500's ascent towards a record high comes after a year of wild swings. Wall Street this year has been shaken by historic levels of uncertainty and volatility as Trump has gone back and forth on tariffs.
The S&P 500 slumped in March and early April as Trump rolled out his plan for massive tariffs, hitting its lowest level of the year on April 8. The market then steadily regained ground since as Trump softened his approach and paused most tariffs.
Markets have also received a boost from relatively strong economic data that has soothed nerves about how the economy has been holding up during the early stages of Trump's tariff regime. Investors this week will be attuned to new inflation data for the month of May.
The S&P 500's record high of 6,144.15 was set on February 19. The benchmark index fell as low as 4,982.77 on April 8, about 18.9% below that high, before staging a remarkable recovery.
Wall Street banks this year have have slashed and then raised their year-end projections for the S&P 500 as shifts in trade policy and surprisingly strong economic data have changed the outlook for markets.
Goldman Sachs in May raised its year-end target for the S&P 500 to 6,100 after the bank had previously cut its target twice this year. UBS in May raised its target to 6,000 after similarly having cut it earlier in the year.
Other banks have taken note, too. Deutsche Bank last week raised its year-end target to 6,550 after also having cut it earlier. JPMorgan Chase on Thursday raised its year-end target to 6,000 after a previous cut. The S&P 500 is trading just above 6,000 as of Monday.
'The earnings outlook has been sensitive to policy decisions to an unprecedented degree, specifically on tariffs,' analysts at Deutsche Bank said in a June 2 note. 'We now see the tariff drag at only about one-third of what we previously penciled in.'
Sam Stovall, chief investment strategist at CFRA Research, said in a Monday note that if the S&P 500 eclipses a new record high, it will officially end the correction that the index entered on March 13, when it had just fallen 10% from its February high. A correction is a Wall Street term for falling 10% from a record high.
Historically, the S&P 500 has risen an average of 10% over the next 127 days at the conclusion of a correction, according to Stovall. 'Meaningful, extended gains are not assured, however,' he said.
'Absent major policy surprises, the path of least resistance is to new highs,' analysts at JPMorgan Chase said in a Thursday note.
This is a developing story and will be updated.
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