S&P 500 ends at record on hopes for US-China trade deal, Fed rate cut

S&P 500 ends at record on hopes for US-China trade deal, Fed rate cut (Stan Honda/AFP/Getty Images)

The broad-based S&P 500 finished at 3,039.42, a gain of 16.87 points (0.56 per cent) from Friday's close and about 14 points above the previous record set in late July.

The Dow Jones Industrial Average gained 132.66 points (0.49 per cent) to finish the day at 27,090.72, while the tech-rich Nasdaq Composite Index jumped 82.87 points (1.01 per cent) to close at 8,325.99, also moving within a few points of a record.

Analysts cited upbeat comments from US President Donald Trump on the state of talks with China, as well as hopeful statements over the weekend about the negotiations from the Chinese side.

The upbeat tone on trade came as futures markets overwhelmingly bet the Fed will cut interest rates for the third time in a row.

Some economists and Fed officials argue the central bank should pause to await more details of the trade talks before providing more stimulus.

"The market seems to be saying that between central bank easing and the steps towards enough of a trade agreement to stop tariffs from going up, the world economy is going to stabilize," said LBBW's Karl Haeling.

"This summer there was a great fear of a recession."

Adding to the momentum has been better-than-expected earnings, analysts said.

Companies in the S&P 500 are on track to see a decline of 3.7 per cent in the third quarter from the year-ago levels, but 80 per cent have reported better earnings per share than expected, according to Factset.

This week's calendar includes earnings from Apple, Exxon Mobil and General Motors.

Large technology companies were broadly higher, with Apple, Amazon, Facebook and Google parent Alphabet all winning around one percent or more.

Tiffany surged 31.6 per cent after it confirmed receiving LVMH's bid valuing the iconic high-end jeweller at US$14.5 billion. The US company of the teal jewellery boxes said there were no actual discussions going on but it was "carefully reviewing" the proposal.

AT&T jumped 4.3 per cent as it reached a settlement with activist investors at Elliott Management that includes increased dividends and shareholder buybacks. The company said Randall Stephenson will remain chief executive through at least 2020.