Replacement Nafta deal lifts Dow and S&P

By City A.M.

THE DOW and S&P 500 began the fourth quarter on a positive note yesterday, after a last-minute deal to salvage Nafta as a trilateral pact helped ease trade worries, although major indexes finished off their session highs.

Canada and Mexico accepted more restrictive commerce in the new United States-Mexico-Canada Agreement (USMCA), which will make it harder for global car makers to build cars cheaply in Mexico and aims to bring more jobs to the United States.

Industrial stocks, and more specifically auto and rail-related shares rose. Ford Motor gained 0.8 per cent, while General Motors advanced 1.6 per cent. Among railroads, Kansas City Southern rose 2.9 per cent.

The industrial sector, sensitive to trade developments in recent months, was up 0.9 per cent, its best day in five weeks.

The biggest boost to the industrials, however, was General Electric, which rose 7.1 per cent and was set for its best day in three-and-a-half years after replacing chief executive John Flannery with board member Larry Culp, who, investors hope can transform the company’s portfolio more quickly.

The Dow Jones Industrial Average rose 192.9 points, or 0.73 per cent, to 26,651.21, the S&P 500 gained 10.61 points, or 0.36 per cent, to 2,924.59 and the Nasdaq Composite dropped 9.05 points, or 0.11 per cent, to 8,037.30.

October is traditionally one of the tougher months for the S&P, although LPL Financial’s senior market strategist Ryan Detrick points out the S&P 500 has averaged a 3.3 per cent return during October in mid-term election years.

Small-cap stocks were under pressure, with the Russell 2000 off 1.39 per cent. Smaller names had been seen as more immune to trade pressures and the index is now off nearly four per cent from its 31 August high.

The defensive real estate and utilities sectors led the decliners.

This article provided by NewsEdge.