Dow futures surge over 200 points as China trade truce fuels fresh optimism

Wall Street stocks were poised to rally on Monday, with Dow futures up 200 points as investors welcomed weekend news of an agreement between the U.S. and China that could reduce the American trade deficit with the world’s No. 2 economy.

What are markets doing?

Dow Jones Industrial Average futures












YMM8, +0.90%










 jumped 208 points, or 0.8%, to 24,929, while S&P 500 futures












ESM8, +0.54%










 gained 14 points, or 0.5%, to 2,727, and Nasdaq-100 futures












NQM8, +0.55%










 rose 42.50 points, or 0.6%, to 6,916.50.

Last week, both the Dow












DJIA, +0.00%










and the S&P 500












SPX, -0.26%










fell 0.5%, the third weekly decline of the past four for both. The Nasdaq Composite Index












COMP, -0.38%










sank 0.7%. The small-cap benchmark Russell 2000 index












RUT, +0.08%










 rose 1.3% for its third straight positive week, its longest such streak since January.

Read: The strong dollar is a stock-market drag and poses a threat to earnings growth

What’s driving the market?

The mood was upbeat after Treasury Secretary Steven Mnuchin said over the weekend that the Trump administration would delay implementing tariffs on Chinese goods and “put the trade war on hold,” while working out details of a deal after two days of negotiations between officials.

Even so, the picture wasn’t completely clear as hours later, a conflicting statement was released from U.S. trade representative Robert Lighthizer who said Washington may still resort to tariffs.

Read: Is trade war with China ‘on hold’? Conflicting statements from Trump administration

Worries over trade talks contributed to a sluggish session on Friday, along with concerns about higher bond yields. The 10-year Treasury note yield












TMUBMUSD10Y, -1.54%










 saw its biggest weekly climb in roughly three years last week. The yield was hovering around 3.07% on Monday, after touching a seven-year intraday high of 3.126% on Friday. Higher yields can make stocks look less attractive.

The only top-tier U.S. data on tap for Monday is the Chicago Federal Reserve’s national activity index for April, due at 8:30 a.m. Eastern Time. But a bevy of Federal Reserve speakers will be heard from, kicking off with Atlanta Fed President Raphael Bostic due to make a speech on welfare economics to the Atlanta Economics Club at 12:15 p.m. Eastern

Philadelphia Fed President Patrick Harker is due to take part in a discussion at a Chief Executives Organization event in New York City at 2:15 p.m. Eastern, while Minneapolis Fed President Neel Kashkari will take part in a discussion at Michigan’s Bay College at 5:30 p.m. Eastern.

What are strategists saying?

“This is by no means the end of the matter, especially given the huge gap that remains between the two sides, as highlighted by the lack of any real detail in the announcement. However, this was the encouraging start to talks that traders were after,” said Jasper Lawler, head of research at London Capital Group, in a note, in reference to the U.S.-China trade talks.

What stocks are in focus?

General Electric Co.












GE, -0.40%










 could be active after a report that the multinational conglomerate could be near a more than $20 billion deal to sell its transportation unit to railroad-equipment maker Wabtec Corp.












WAB, +1.10%