FILE- In this Jan. 4, 2019, file photo Mario Picone, center, works with fellow specialists on the floor of the New York Stock Exchange. The U.S. stock market opens at 9:30 a.m. EST on Monday, Jan. 7. (AP Photo/Richard Drew, File)

US stocks climb, led by retailers and smaller companies

January 07, 2019 - 1:54 pm

NEW YORK (AP) — U.S. stocks are rising again Monday as retailers and small companies rally after a report showed strong orders last month for services-sector companies, where most Americans work. Representatives from the U.S. and China began another round of trade negotiations. Technology and health care companies also rose.

KEEPING SCORE: The S&P 500 index added 31 points, or 1.3 percent, to 2,563 as of 1:30 p.m. Eastern time. The Dow Jones Industrial Average climbed 228 points, or 1 percent, to 23,661. The Nasdaq composite gained 108 points, or 1.6 percent, to 6,847. The Russell 2000 index jumped 29 points, or 2.1 percent, to 1,410s.

The S&P 500 is on track for its highest close in more than three weeks and has climbed 9 percent since Dec. 24, but is still 12.5 percent below its record high from late September.

SURVEY SAYS: The Institute for Supply Management said an index of new orders for service companies rose last month. Overall, U.S. service firms kept growing, although the pace of that growth slowed somewhat. The services sector covers a broad variety of industries including banking, education, health care and construction.

Amazon rose 3.1 percent to $1,623 and Home Depot picked up 2.3 percent to $177.60 while General Motors climbed 4.2 percent to $34.72.

Last week the ISM reported that U.S. manufacturing grew at the weakest pace in two years, which contributed to the market's steep loss that day.

HIGH HOPES: The U.S. and China both placed new tariffs on billions of dollars' worth of each other's imports in 2018, and those taxes are likely to rise in March if they don't make progress in negotiations.

U.S. stocks soared more than 3 percent Friday as investors reacted to reports of the upcoming talks as well as a report showing strong hiring by U.S. employers. They also responded positively to comments from Federal Reserve Chairman Jerome Powell, who promised a flexible approach on how quickly the central bank would raise interest rates in the future.

SHAKING THE TREE: Dollar Tree rose after activist investment firm Starboard value disclosed a stake in the discount retailer and pushed the company to consider changes, including selling the Family Dollar business it bought in 2015. Starboard also said Dollar Tree should consider raising prices on some items. It nominated seven candidates for seats on Dollar Tree's board of directors.

The stock climbed 6.2 percent to $98.66.

POWER FAILURE: The parent company of Pacific Gas & Electric plunged after Reuters reported that the company might file for bankruptcy protection as it faces potentially huge liabilities connected to deadly wildfires in California. The cause of the Camp wildfire hasn't been determined, but PG&E reported an outage around the time and place it began. The fire killed at least 86 people and destroyed 15,000 homes. PG&E also faces lawsuits related to wildfires in 2017.

The company's stock dropped 20.8 percent to $19.32. PG&E stock traded at almost $70 a share in October 2017 and was valued at about $48 in November 2018.

ENERGY: Oil prices continued their recent rally. U.S. crude rose 2.5 percent to $49.17 per barrel in New York. After sinking to an 18-month low of $42.53 a barrel on Dec. 24, the price of U.S. crude has risen for seven of the last eight trading days, and is up 16 percent over that time. Brent crude, used to price international oils, was up 1.9 percent to $58.14 per barrel in London.

LILLY AND LOXO: Eli Lilly will buy Loxo Oncology for about $8 billion as it bulks up on cancer treatments that target gene abnormalities. Loxo soared 65.8 percent to $231.85 and Eli Lilly added 1.3 percent to $116.12.

The deal marks the second big pharmaceutical acquisition announced in the new year. On Thursday Bristol-Myers Squibb agreed to buy Celgene for $74 billion in cash and stock, one of the largest drug industry acquisitions of all time.

POLITICAL RISKS: The partial shutdown of the U.S. government stretched into its third week, and there were few signs of progress in staff-level talks over the weekend. That means many hundreds of thousands of federal workers aren't getting their paychecks, which could slow the economy.

Meanwhile British legislators will vote next week on proposed terms for Britain's departure from the European Union. The government of Prime Minister Theresa May agreed to a deal with European Union leaders in November, but a Parliamentary vote on the package was canceled because it was clear it would be rejected. That raises the possibility that the U.K. will leave the European Union without any kind of economic deal, which could have severe effects on the British and European economies.

SHOCK EXCHANGE: Shares of the companies that run stock exchanges including the New York Stock Exchange and Nasdaq fell after a group of nine banks, brokers and other companies said they are planning to launch a new exchange. The companies said the Members Exchange will reduce costs and simplify trading.

Nasdaq fell 2.4 percent to $80 and Intercontinental Exchange, the parent company of the NYSE, fell 1.5 percent to $74.57. Cboe Global Markets shed 1.2 percent to $97.17.

BONDS: Bond prices fell. The yield on the 10-year Treasury note rose to 2.68 percent from 2.65 percent.

CURRENCIES: The dollar fell to 108.53 yen from 108.51 yen. The euro rose to $1.1466 from $1.1400. The British pound rose to $1.2757 from $1.2740.

OVERSEAS: Germany's DAX shed 0.2 percent and the FTSE 100 in Britain and CAC 40 France both fell 0.4 percent.

Japan's Nikkei 225 index gained 2.4 percent, while South Korea's Kospi rose 1.3 percent. Hong Kong's Hang Seng climbed 0.8 percent.

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Associated Press Writer Annabelle Liang contributed from Singapore

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