Dow jumps more than 200 points after the US and Canada secure a deal to replace NAFTA

Stocks rose sharply on Monday as investors cheered news of Canada joining a trade deal with the United States and Mexico.

The Dow Jones Industrial Average rose 200 points as Chevron and Boeing outperformed. The S&P 500 gained 0.5 percent, led by 1 percent jumps in materials and industrials. The Nasdaq Compositeadvanced 0.2 percent as Amazon and Apple both climbed about 1 percent.

“The biggest risk factor [in the market] is a trade war and we’ve dialed that down a bit,” said Mike Bailey, director of research at FBB Capital Partners. Bailey noted, however, the market may be going too high too fast right now. “I’m not calling for a major correction or a bear market, but I think we’re getting a bit ahead of ourselves here.”

Traders work on the floor of the New York Stock Exchange (NYSE) ahead of the closing bell, November 30, 2017 in New York City.

Drew Angerer | Getty Images News | Getty Images
Traders work on the floor of the New York Stock Exchange (NYSE) ahead of the closing bell, November 30, 2017 in New York City.

Canada and the U.S. secured a trade deal to replace the current North American Free Trade Agreement (NAFTA). The new accord is expected to be named the United States-Mexico-Canada Agreement, or “USMCA” for short, according to a senior U.S. administration official.

The agreement will deliver more market access to U.S. dairy farmers, while Canada has effectively capped automobile exports to the States. Both nations, along with Mexico – which agreed to a deal earlier this year – are expected to sign the agreement by the end of November. It would then be passed to Congress.

“The market is happy because we’re removing an uncertainty,” said Maris Ogg, president at Tower Bridge Advisors. “It looks like this trade deal will benefit both countries, but I wouldn’t call it a great win for the Trump administration.”

Ogg noted the deal serves as a stepping stone for the U.S. in its trade negotiations with China.

Shares of Ford and General Motors both jumped more than 1 percent following the news. Boeing and Caterpillar, stocks that are also sensitive to trade news, rose 2.7 percent and 0.3 percent, respectively.

The moves on Wall Street came after theS&P 500 notched its best quarter since 2013, having risen 7.2 percent in that time period.

Tesla shares surged more than 16 percent after CEO Elon Musk settled charges with the Securities and Exchange Commission over his recent aborted bid to take the firm private.

As part of the settlement, Musk will relinquish his position as chairman of the board at Tesla for at least three years. Tesla and Musk will pay $20 million each.

Meanwhile, General Electric surged 9.3 percent after the company abruptly removed CEO John Flannery from his post and named Lawrence Culp as his successor.

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