Market Snapshot: Stocks rally on tentative deal to avert another government shutdown

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U.S. stocks rallied midday Tuesday, with the Dow Jones Industrial Average gaining more than 300 points, after lawmakers reached a tentative deal to prevent a government shutdown and as optimism grew over a potential trade deal between the U.S. and China.

How are major indexes faring?

The Dow

DJIA, +1.33%

 climbed 333 points, or 1.3%, to 25,386, while the S&P 500 index

SPX, +1.19%

 added 32 points, or 1.2%, to 2,742. The Nasdaq Composite Index

COMP, +1.26%

 advanced 95 points, or 1.3%, to 7,403.

Read: Morgan Stanley warns of a looming earnings recession

What’s driving the market?

Democratic and Republican lawmakers reached a deal late Monday to avert another damaging government closure after GOP negotiators agreed to a border-security deal that will involve far less money for an extension of the southern U.S. border wall than President Donald Trump has been demanding.

The tentative agreement, which involves 55 miles of new border fencing, still requires approval from Trump, who reportedly is not “thrilled” but stopped short of saying he will reject it.

Bilateral trade negotiations entered a second day in Beijing, with Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer due to arrive Thursday for more high-level discussions. A 12:01 a.m. Eastern time March 2 deadline is looming for an agreement to be struck between the two countries.

Meanwhile, investors digested a new batch of earnings releases as fourth-quarter earnings season entered its final stretch.

The National Federation of Independent Businesses small business index fell 3.2 points to 101.2, the lowest level since the weeks leading up to the 2016 presidential election, though above its historical average of 86.

The number of job openings in the U.S. reached an all-time high of 7.3 million in December while the share of Americans quitting there jobs held steady at 2.3%, according to the Labor Department.

At 12:45 p.m. Fed Chairman Jerome Powell will give a speech on rural economic policy at Mississippi Valley State University.

What are analysts saying?

”The relief from avoiding another government shutdown, and speculation that something will happen with China, is helping push markets higher, though I’m surprised at this reaction, given that Trump has not yet said he’d sign the deal,” Larry Benedict, chief executive of the Opportunistic Trader told MarketWatch.

“The S&P 500 is pushing up against the 2,735 resistance level that we’ve hit several times. There may be more on the upside, but we could also be seeing some topping action at these levels,” he said.

What stocks are in focus?

Coty Inc.

COTY, +14.60%

jumped 14% after JAB holdings announced its plans to commence a tender offer to acquire 150 million shares of the company at a price of $11.65 a share, versus Monday’s closing price of $9.66 per share.

Shares of Molson Coors Brewing Co.

TAP, -9.44%

slid 9.4% after the beer maker reported higher-than-expected, fourth-quarter earnings but missed Wall Street’s revenue forecasts.

Ellie Mae Inc.

ELLI, +20.90%

soared 21% after the company agreed to be acquired by private-equity firm Thoma Bravo in a deal worth $3.7 billion.

Under Armour Inc.

UA, +6.48%

shares gained 6% after the company beat earnings and revenue estimates for the fourth quarter.

Shares of Gilead Sciences Inc.

GILD, -3.71%

 fell 4.4% after the pharmaceutical company announced Monday evening that a late-stage, placebo-controlled study designed to evaluate a type of chronic liver disease drug, Selonsertib, didn’t meet its desired outcome.

US Foods Holding Corp.

USFD, -3.49%

dropped 4.3% after the company reported fourth-quarter earnings that fell short of Wall Street forecasts.

Shares of Electronic Arts. Inc.

EA, +5.09%

rose 4.6% after the videogame publisher announced that its new game, “Apex Legends,” had attracted 25 million new players in its first week of availability.

TripAdvisor Inc.

TRIP, +1.19%

and Activision Blizzard Inc.

ATVI, +2.84%

are due to report earnings after the market closes.

How are other markets trading?

In Asia, the Nikkei 225 index jumped 2.6% and the Shanghai Composite rose 0.6%. The Stoxx Europe 600

SXXP, +0.46%

also gained while the U.K.’s FTSE 100 edged lower.

Crude oil

CLH9, +2.16%

 rose, while gold

GCH9, +0.05%

was generally flat and the U.S. dollar

DXY, -0.31%

fell against its peers.

—Barbara Kollmeyer contributed to this article

Providing critical information for the U.S. trading day. Subscribe to MarketWatch’s free Need to Know newsletter. Sign up here.

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