STREAMING NOW: Watch Now

Stocks pop after new US-Canada-Mexico deal

The stock market appears to like the new trade agreement between the United States, Canada and Mexico....

Posted: Oct 2, 2018 10:06 AM
Updated: Oct 2, 2018 10:06 AM

The stock market appears to like the new trade agreement between the United States, Canada and Mexico.

Stocks popped after all three countries agreed to an 11th hour deal to replace NAFTA.

The Dow rose 193 points, a gain of 0.7%. The S&P 500 gained 0.4%, and the Nasdaq lost 0.1%.

The reworked trade deal, announced late Sunday night, was reached after Canada agreed to give US dairy farmers greater access to the Canadian market.

The United States also agreed to make concessions on some automobile tariffs for cars and trucks built in Canada and Mexico as part of the agreement, which replaces NAFTA and will be called the United States-Mexico-Canada Agreement (USMCA).

Shares in major automakers rose on the news. GM gained 1.6%, and Ford climbed 0.8%. Fiat Chrysler rose 2.7%.

Still, some market experts said investors may be overreacting to the USMCA deal. That's because the United States still faces another major trade battle.

"While the U.S. has reached a new trade agreement with Mexico and Canada, growing trade conflict between China and the U.S. threatens economic growth in both countries," said David Kelly, chief global strategist with JPMorgan Funds, in a report Monday.

Eric Winograd, senior economist with AB, also thinks that China-US tension will not be resolved this easily.

"The US relationship with China is much more complicated than its relationship with Canada. And of course the stakes are considerably higher when dealing with China—the Chinese have leverage over the US that Canada simply doesn't have," Winograd wrote, referring to China's ownership of US Treasury debt as well as the fact that it's a much bigger market for US exports.

"I certainly wouldn't rule out an agreement being reached with China, but I don't think that the US-Mexico-Canada Agreement provides a template that can be used in discussions with the Chinese," Winograd added.

Others think that a US-China deal is inevitable, which makes the market's reaction to the USMCA agreement, a logical one.

"Many investors are betting there's room for a market friendly compromise after the US midterm elections in early November when the Chinese will have an incentive to deal to avoid the 25% tariff rate that kicks in on $200 billion in Chinese exports on January 1, 2019," wrote Alec Young, managing director of global markets research for FTSE Russell, in a report.

Other market movers

It's not just the trade deal helping move the markets.

The surprise ouster of General Electric CEO John Flannery and a deal between Tesla and the SEC are also having a big effect.

Shares of GE jumped 7% following the news that Flannery, who had only been CEO since August 2017, is being replaced by Larry Culp, a former head of industrial conglomerate Danaher.

Culp, who joined GE's board in April, faces a difficult task in getting GE back on track. GE also announced Monday that it was taking a charge tied to its struggling GE Power unit. The stock had fallen 35% this year before Monday's surge.

GE's market value slipped below $100 billion last week for the first time in more than nine years. And the company was removed from the Dow Jones Industrial Average in June after a more than 100-year stay in the iconic market barometer.

Tesla also rallied Monday after the electric car maker reached a settlement with the Securities and Exchange Commission that will require Elon Musk to step down as chairman but allow him to stay on as CEO.

Shares of Tesla climbed 17%. The stock plunged 14% Friday on the news that the SEC had filed a lawsuit accusing Musk of making "false and misleading statements" earlier this summer when he tweeted that he had "funding secured" for a deal to take Tesla private.

As part of Tesla's deal with the SEC, Musk did not admit to any wrongdoing. The company is also paying a $20 million fine.

New York Coronavirus Cases

County data is updated nightly.

Cases: 2729595

Reported Deaths: 57534
CountyCasesDeaths
Kings35008110971
Queens32689410411
Suffolk2554533688
Nassau2261353332
Bronx2133646806
New York1767984665
Westchester1481672356
Erie1248032050
Monroe976581253
Richmond928091973
Orange62183944
Onondaga59393818
Rockland55509783
Dutchess37964510
Albany34399413
Oneida33196643
Niagara28724419
Broome28212434
Saratoga24658225
Schenectady19328245
Ulster19063291
Rensselaer17411193
Chautauqua14985195
Oswego14170135
Putnam13145101
Chemung12834175
St. Lawrence12815143
Steuben12484190
Ontario11683119
Jefferson11388106
Wayne10251103
Cattaraugus9983157
Cayuga9729113
Sullivan958890
Genesee8633144
Herkimer8312143
Clinton809948
Fulton7854115
Tompkins741461
Madison7365109
Warren730096
Livingston722176
Montgomery7191162
Washington668580
Tioga634473
Cortland609489
Allegany5988122
Columbia5693113
Chenango554795
Orleans549496
Franklin541526
Otsego537063
Wyoming530266
Greene493189
Delaware439951
Lewis420340
Seneca324567
Essex298438
Schoharie268124
Yates198534
Schuyler193320
Hamilton5133
Unassigned1432
Out of NY0339
Utica
Cloudy
38° wxIcon
Hi: 37° Lo: 24°
Feels Like: 33°
Oneonta
Cloudy
33° wxIcon
Hi: 36° Lo: 24°
Feels Like: 24°
Herkimer
Cloudy
38° wxIcon
Hi: 37° Lo: 24°
Feels Like: 33°
Old Forge
Cloudy
38° wxIcon
Hi: 33° Lo: 22°
Feels Like: 33°
WKTV Radar
WKTV Temperatures
WKTV Severe Weather
2022 WKTV Golf Card only $99.99
Game Day Deals - New Deals Each Week
Stuff the Bus Locations
Saluting Those Who Are Proud 2 Serve