President Donald Trump's decision to suspend the U.S.' trade war with China and to resume talks resounded strongly on Wall Street Monday, especially among stocks with a China theme. Broad market indexes surrendered some early strong gains late in the day, but ended with an upward bounce.
XThose posting big gains included Alibaba (BABA), Baozun (BZUN) and New Oriental Education (EDU), the latter two on the IBD 50 list of top growth stocks.
Trump's move let the bulls loose on the stock market today, but the bullish charge lost momentum.
The Dow Jones Industrial Average added 0.4%. Tech-heavy Nasdaq gained 1.1% as hot software names continued their tear, while the small-cap Russell 2000 Index rose 0.2%. The S&P 500 moved up 0.8%.
Volume was up, as big institutional investors returned to the market. NYSE trade rose nearly 13%, while Nasdaq turnover added 10%, preliminary data showed.
Among Chinese-related stocks benefiting from the trade war truce, online giant Alibaba gapped up 3.3%, blasting through the 50-day moving average line. The company's stock has been below the 50-day line since early May, and only began retesting it late last week. The company is in the midst of an eight-week consolidation.
Up nearly 5% in early trading, New Oriental Education eased in late trading, closing just 1.9% higher. It's now within pennies of its 98.09 buy point out of an eight-week cup.
E-commerce software solutions provider Baozun gapped up 7.5%. It is now extended past its 49.20 buy point after emerging from a six-week cup in June. But it is in buy range from an alternative entry at 52.14. Baozun, on IBD Leaderboard's Leaders Near A Buy Point list, carries a best-possible 99 Composite Rating from IBD, meaning it has outperformed 99% of all stocks on key metrics.
Also posting gains for the day were Tencent Music Entertainment (TME), up 3.4%, Weibo (WB), up 0.9%, and JD.com (JD), up 3%. JD.com tried to clear a 31.73 buy pint.
Also showing strength were tech and software names that could benefit handsomely from a possible trade deal between the U.S. and China.
IBD's Sector Leaders List, its toughest and most restricted list in terms of both technical and fundamental factors, is filled with software names now. Many of those rose solidly Monday on the new trade optimism.
Servicenow.com (NOW), the maker of workflow and business management software, advanced 3.3%. With a 99 Composite Rating, a 97 EPS Rating and a 95 RS Rating, it's also the top stock in the Computer Software-Enterprise group. It's now knocking on the door of a 281.84 entry.
Another enterprise software powerhouse, Upland Software (UPLD), gained 2.6%. Upland ties ServiceNow for No. 1 in the enterprise software group, with a 99 Composite Rating. A breakout from an ascending base resulted in a sell signal.
Epam Systems (EPAM), an outsourced software developer for the information technology industry, added 2.1%. It's the No. 1 stock in the tech services group, with a 99 Composite Rating. After a run-up in price from a consolidation early in the year, Epam formed an eight-week flat base. It remains about 3% below the buy point.
Paylocity (PCTY), a cloud-based software company for personnel and management applications, rose 3.4%. It emerged from a cup-with-handle base in mid-April. After moving above its 5% buy zone for a number of weeks, it's once again in a buy zone. Paylocity also has a 99 Composite Rating.
Meanwhile, oil-related stocks also initially rose sharply Monday, as OPEC began two days of talks and oil prices rose despite a report that oil supplies are growing faster than demand. But what looked like a strong day for crude ended with minor gains.
Analysts said the oil cartel will likely keep output cuts in place in an effort to bolster crude prices. That follows a meeting between Russian leader Vladimir Putin and Saudi Arabian King Mohammed bin Salman — major players in the global oil industry — at last week's G-20 meeting where the two agreed to cooperate on boosting oil prices.
On the IBD 50, ProPetro Holding (PUMP) gained 1.7% as the oil and gas fracking company stock works on the right side of a deep consolidation pattern well below its 25.48 entry.
On the Dow, major oil giants Chevron (CVX) and Exxon (XOM) showed early strength but fell back. Chevron gained 0.3%, and Exxon 0.4%.
Among exchange traded funds, Innovator IBD 50 ETF (FFTY) added 1.1%.
In other market news, the 10-year Treasury, which has slipped below 2% yield in recent weeks, rose above that level. That could be a bullish sign for growth. Oil prices increased 1.2%, but gold fell 1.9%. Overseas markets were mostly higher, with the British FTSE gaining almost 1%, and Japan's Nikkei 225 up more than 2%.
Even with the easing of the U.S.-China trade war, the July 4 holiday-shortened week could be a roller-coaster. On Friday, the day after Independence Day, the government will release its June jobs report. After two months of slowing job growth, the June report could provide as much fireworks as July 4.
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