Stocks posted solid gains on Monday after the White House said it reached a preliminary agreement with Mexico on replacing NAFTA. The Nasdaq composite index topped 8,000 for the first time.
The trade deal is far from final and few details were made public during trading hours Monday, but investors were encouraged that the countries are working toward a resolution.
The US still needs to reach an understanding with Canada, the third party in the accord and the second-largest trading partner for the US Canada’s NAFTA negotiator, Foreign Minister Chrystia Freeland, is scheduled to fly to Washington Tuesday to try to restart talks.
Automakers, which would stand to benefit from warmer trade relations between the US and Mexico, rose sharply. Major exporters including chemical and industrial companies rose, and so did banks and technology companies.
“Most of this year has been a series of potentially negative events on trade, setting up barriers to trade,” said Craig Birk, chief investment officer for Personal Capital. “The market is welcoming anything that’s the opposite.”
Birk said investors were glad to get some good news on trade even though talks on a NAFTA replacement will likely continue beyond the Congressional elections this fall and into 2019.