Investing.com - The Nasdaq closed above an unprecedented 8,000 level on Monday as investors cheered signs of easing global trade tensions after the U.S. and Mexico reached a bilateral trade agreement.
President Donald Trump announced his administration had reached a bilateral deal with Mexico, reducing investor fears somewhat over the prospect of a global trade war, despite concerns that Canada could be booted from the North American Free Trade Agreement (NAFTA) if the country fails to make concessions.
"By saying Canada could be left out, the US is threatening to take a tough line in those talks," CIBC said in a note to clients. "The scenario poses uncertainty for the Canadian economy, and could prompt Bank of Canada to hold off on a rate rise early next month."
The deal, which Trump prosed calling the United States-Mexico Trade Agreement, brings Trump a step closer to overhauling NAFTA, a name he said had a "bad connotation" for the United States.
In a sign of improved sentiment on trade, Boeing (NYSE:BA) and Caterpillar (NYSE:CAT), which are trade bellwethers because of their large international exposure, saw their shares end the day up sharply.
Shares of farming companies, meanwhile, also rallied following the deal as Trump said Mexican officials promised the country would start buying as much U.S. farm product as possible.
Financials, mostly banks, rose sharply as U.S. bond yields rose, brushing off somewhat dovish comments from Federal Reserve Chairman Jerome Powell on Friday, when he stressed that rate hikes would continue at a gradual pace.
Rising Treasury yields are seen as boon for banks, boosting their net interest margin, the difference between the interest income generated by banks and the amount of interest paid out to their lenders.
Rallying energy stocks also supported the move higher in the broader market, as oil prices added to gains from last week despite an uptick in production from major oil producers.
On the New York Mercantile Exchange crude futures for October delivery added 15 cents to settle at $68.87 a barrel.
On the corporate news front, Tesla (NASDAQ:TSLA) stock came under pressure after the company scrapped plans to go private, raising further investor doubt over the accuracy of Musk's recent claim in a tweet that he had secured funding to take the company private at $420 per share.
"We expect [Tesla] shares to be under pressure in the near term as investors question the go-private process and the outcome of staying public," Baird said.
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