Wall Street rallies as US and Mexico reach trade deal

U.S. stocks posted strong gains on Monday, with the benchmark S&P 500 and the Nasdaq hitting all-time highs, as the United States and Mexico reached a deal to replace the North American Free Trade Agreement.

Shares of automakers, which stand to gain from the deal, were higher with Ford (F.N) up 3.2 percent, General Motors (GM.N) gained 4.6 percent and Fiat Chrysler (FCAU.N) climbed 4 percent.

Auto parts makers also rose with Goodyear Tire & Rubber Co (GT.O) up 4.6 percent.

The trade-sensitive industrials sector .SPLRCI was up about 1.24 percent. Caterpillar (CAT.N) rose 2.6 percent and was the second-biggest boost to the Dow Jones industrial average .DJI.

United States and Mexico reached a deal to replace NAFTA and talks with Canada were expected to begin immediately in the hopes of reaching a final agreement by Friday, a senior U.S. trade official said.

“I think the question most people have is can the markets go higher? The answer is yes, earnings drive markets and this season has been an incredible one,” said JJ Kinahan, chief market strategist at TD Ameritrade in Chicago.

Also helping sentiment was Washington pressing the European Union to speed up trade negotiations.

At 12:52 a.m. EDT the Dow Jones Industrial Average .DJI was up 256.14 points, or 0.99 percent, at 26,046.49, the S&P 500 .SPX was up 22.08 points, or 0.77 percent, at 2,896.77 and the Nasdaq Composite .IXIC was up 73.71 points, or 0.93 percent, at 8,019.69.

Nine of the 11 major S&P 500 sectors were higher. The top percentage gainer was the materials sector .SPLRCM with a 1.75 percent gain.

The defensive utilities .SPLRCU and real estate .SPLRCR sectors were down 0.86 percent and 0.41 percent.

Chipotle Mexican Grill (CMG.N) slipped 4.5 percent, the most on the S&P, after Wedbush downgraded its shares, citing higher risks to the burrito chain’s near-term same-store sales and margin estimates.

Tesla Inc (TSLA.O) dropped 1.9 percent after abandoning a plan to take the electric carmaker private.

Advancing issues outnumbered decliners for a 2.07-to-1 ratio on the NYSE and a 1.98-to-1 ratio on the Nasdaq.

The S&P index recorded 52 new 52-week highs and no new lows, while the Nasdaq recorded 150 new highs and 23 new lows.