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28Aug2018

US and Mexico Reach Trade Deal

By Selina Stoller, Summit Consumer Receivables Acquisitions, LLC

Stocks jumped on Monday as the United States and Mexico made a new trade deal.

The Dow Jones Industrial Average jumped more than 250 points after President Trump announced the United States-Mexico Trade agreement potentially removing uncertainty plaguing investors for months.

“The name NAFTA has bad connotation because the United States was hurt very badly by NAFTA,” President Trump said. Trump added that the deal with Mexico would benefit farmers and manufacturers.

As a result of the announcement, the Nasdaq Composite climbed 1 percent to an all-time high, breaking above 8,000 points for the first time. Facebook, Amazon, Netflix, and Alphabet also rose. The S&P 500 gained 0.8 percent to hit a record high with materials and financials marked the best-performing industries. The Mexican peso additionally rose 1.2 percent against the dollar.

Shares of Caterpillar and Boeing rose 2.8 percent and 1.3 percent, respectively. These stocks are considered notable trade spearheads because of their large exposure to overseas markets.

Shares of Ford, General Motors, and Fiat Chrysler followed suit and climbed. Bank shares surged, led by gains in Goldman Sachs, Morgan Stanley, Citigroup and J.P. Morgan Chase.

Investors have been cautiously tepid for months over trade concerns as the U.S. has taken a more individualistic stance towards its economy and trade deals under the Trump administration. And according to CNBC’s Mad Money host Jim Cramer, the stock market cares more about strong economic growth than President Trump’s legal troubles. “The market likes profits,” Cramer said.

The U.S. initiated tariffs on billions of dollars of Mexican and Chinese imports. In response, both countries retaliated. This positive trade news paves the way for other future deals between Mexico and America and hopefully a mutually beneficially trade relationship moving forward.

  • 28 Aug, 2018
  • Summit Consumer Receivables Acquisitions, LLC

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