The bull market continued its upward trajectory as the Nasdaq Composite and S&P 500 reached record highs, lifted by the strength in the technology sector. Tech heavyweights like Amazon and Paypal led the charge that saw the Nasdaq gain 1%.
Tech ETFs rallied off the boost in the indexes with the Vanguard Information Technology ETF Technology Equities (NYSEArca: VGT) gaining 0.93%, the Technology Select Sector SPDR Fund Technology Equities (NYSEArca: XLK) was up 1% and the First Trust Dow Jones Internet ETF (NYSEArca: FDN) was up 0.83% just before the close of the market.
NAFTA Deal with Canada Looming
The markets were also boosted by a looming NAFTA deal with Canada as the country’s Foreign Affairs Minister Chrystia Freeland said that ongoing talks with the U.S. remain “constructive” despite the threat of punitive tariffs on Canadian-made cars if Canada spurns the prospect of a new North American Free Trade Agreement come Friday. Freeland praised Mexico’s trade concessions on autos and labor rights on Tuesday as she rejoined NAFTA talks.
The trade deal struck with Mexico on Monday would effectively eliminate the NAFTA name and would now be called The United States-Mexico Trade agreement. The Trump administration was pushing for a revamp of the NAFTA agreement prior to December 1 when Mexico turns over its leadership to the incoming administration of President-elect Andrés Manuel López Obrador.
The bilateral U.S.-Mexico deal announced on Monday gives U.S. President Donald Trump the right to impose 25% tariffs on imports of Mexican-made passenger vehicles. If Trump proceeds with the tariffs, Mexican duty-free exports of cars and sport-utility vehicles to the U.S. would have a cap of 2.4 million vehicles per year.
“It looks like a revised NAFTA agreement between the U.S., Mexico and Canada may be reached shortly. That is giving investors optimism that a U.S.-China trade deal can be worked out in the fall which would remove an obstacle for markets to move higher,” said Jeff Kravetz, a regional investment strategist at U.S. Bank Private Wealth Management.
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