U.S. stocks bounced higher Monday, attempting to chip away at some of their losses for the year, as investors eyed signs of progress in trade negotiations between the U.S. and China.
The Dow Jones Industrial Average climbed 215 points, or 0.9%, to 23277 shortly after the opening bell. The S&P 500 added 0.7% and the Nasdaq Composite rose 0.9%.
For the year, all three stock indexes are poised to end lower—weighed down by worries about global growth, trade and the path of interest rates.
President Trump tweeted over the weekend that he and Chinese President Xi Jinping had recently talked by phone and made “big progress” in trade talks that are due to wrap up on March 1. A team of U.S. trade officials is expected in Beijing the week of Jan. 7 for several days of talks.
The U.S. is urging Beijing to fill in the details of the trade and investment proposals that Chinese officials have made in recent weeks, The Wall Street Journal reported.
“As long as they keep talking, that is positive for the market,” said Geoffrey Yu, head of the London investment office at UBS Wealth Management. “After a few tumultuous weeks, the market is welcoming some stability.”
Still, Mr. Yu said that major challenges remain for markets in 2019. “It will be another volatile year,” he said.
Trade frictions have been a major factor behind the year’s increased stock market volatility, along with worries over the worsening outlook for the global economy and uncertainty surrounding the unwinding of the Federal Reserve’s easy-money policies. More recently, a U.S. government shutdown that appears likely to stretch into January has added to investors’ concerns.
All that has led to dizzying moves for stock markets, which sold off early in the year, then rose to records in the fall only to drop sharply in recent weeks. Last week, U.S. stocks posted their worst-ever Christmas Eve selloff before then logging their biggest one-day point gain on record.
Most global stock markets are down for the year, with the Dow industrials losing around 6%, Stoxx Europe 600 shedding 13% and Japan’s Nikkei Stock Average falling 12%.
The heightened volatility spared no asset class. Oil prices gyrated, tumbling sharply in recent weeks after hitting multiyear highs in October.
Will 2019 Be Another Rocky Year for Markets?
On Monday, Brent crude, the global price benchmark, was up 2.5%. Still, crude ends the year down almost a fifth as U.S. production climbed to record highs and supplies of crude have risen around the world.
“Don’t underestimate shale producers and the wider U.S. oil industry in general,” analysts at consulting firm JBC Energy said in a note to clients. “U.S. oil production will have grown by a massive 2-plus million barrels a day” this year.
Meanwhile, data on Monday indicated China’s manufacturing sector contracted in December, hitting its lowest level in nearly three years.
The official manufacturing purchasing managers index unexpectedly fell to 49.4 in December from 50.0 in November, data from the National Bureau of Statistics showed Monday. The result was the lowest since February 2016 and fell short of the forecasts of many economists.
“The broad-based PMI decline implies higher economic downward pressure” in China, economists at Citigroup said in a note to clients.
Chinese stocks have proved the worst performers among major world markets of the past year. The benchmark Shanghai Composite Index is down 24.6% this year.
The reading adds to recent data indicating that economies in Europe and China are slowing, sparking worries that the malaise could spread to the U.S. despite relatively steady numbers on the American economy.
In currencies on Monday, the WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, was down 0.2%. The index is up 4.6% for the year.
The Stoxx Europe 600 rose 0.5% following an upbeat session in Asia. Some markets across the world were closed for the New Year’s Eve holiday. Oil prices also rose while the dollar fell.
Write to Georgi Kantchev at georgi.kantchev@wsj.com
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