S&P 500 nears all-time high as investor fears recede

• The stock market rose Monday with the S&P 500 opening at a new intraday high of 3,042. 
• Investors are cheered by reports of progress in trade talks between the U.S. and China.
• Shares are also getting a lift from expectations that Federal Reserve may again cut interest rates this week.

The S&P 500 opened at a record high Monday, passing 3,040 within minutes of the morning open as investors were cheered by the prospects of another interest rate cut this week by the Federal Reserve and hopes for a trade deal between the U.S. and China. 

The Dow and tech-heavy Nasdaq indices are rose in trading on Monday morning, both up around 0.6% after the markets opened at 9:30 a.m. E.T.  

The Trump administration and China are close to finalizing sections of a preliminary trade deal, the Office of the U.S. Trade Representative said Friday, according to CNBC. 

“Our expectations are for continued progress in the trade talks, notwithstanding some room for episodes of ‘two steps forward, one step back’ in the process,” analysts with Oppenheimer Asset Management said in a client note.

The 15-month trade war between the world’s two biggest economic powers has dampened economic growth by an estimated 0.3% and resulted in 300,000 fewer jobs being created, Moody’s Analytics said last month. 

Signs of progress in trade negotiations may boost investor sentiment this week, analysts said.

“U.S. stocks seem poised to breakout to fresh record highs this week as both Chinese and US officials signal the phase-one deal is close to being done,” said Edward Moya, senior market analyst for foreign-exchange firm OANDA, in a research note.

He added, “Stocks could also be supported on expectations Fed Chair Powell will deliver a third consecutive [rate cut] and remain data-dependent if more are warranted.”

Trump announces “phase one” of trade deal with China

On Friday, the S&P 500 closed within 0.1% of its all-time high on July 26. Investor attention has shifted to corporate earnings as tension eased after Washington and Beijing resumed negotiations.

There’s also a historical precedent for a late October rally, notes Ryan Detrick, senior market strategist for LPL Financial.

“October 28th is historically the best day of the year for stocks,” Detrick said in a client note on Monday. “It kicks off the best six months of the year (November-April) and says goodbye to the worst six months Lastly, the last few days of October to the first few days of November is one of the strongest times of the year.”

— With reporting by The Associated Press.