Momentum Stocks Rally on Trade Agreement, FAANGs Advance

(Bloomberg) -- The biggest stocks in the technology and the internet sectors rallied on Monday, boosted by an agreement on trade between the U.S. and China that sparked a broad advance for high-growth names.

The so-called FAANG stocks were among the biggest gainers on the day. Inc. climbed 4.2 percent while Netflix Inc. was up 2.4 percent. Facebook climbed 1.9 percent while Google-parent Alphabet advanced 1.1 percent. Apple Inc. rose 1.9 percent.

The megacap stocks, which have been among the most volatile on Wall Street over the past several weeks as investors reassess their valuations and growth potential, were part of a broad technology rally spurred by the trade development. Chipmakers were also solidly higher on the day.

“This isn’t a fundamental shift, just a shift in sentiment. Positive sentiment had gotten washed out, so this could be an excuse for it to come back again,” said Matt Miskin, a market strategist at John Hancock Financial Services, who spoke with Bloomberg News in a phone interview and cautioned against making too much of the day’s rally.

“Today is just a momentum trade, a risk-on trade, and when you get these kinds of moves, large-cap tech names are where the capital has been flying into. But while the tone over the weekend was definitely more positive than we’ve seen, there was a lack of specifics, details, and concrete answers to difficult questions. That could lead to the market needing more for further upside.”

Over the weekend, U.S. President Donald Trump and Chinese President Xi Jinping agreed to keep their trade war from escalating with a promise to halt the imposition of new tariffs for 90 days while they negotiated a lasting agreement.

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