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After their strongest quarter since 1998 in the second quarter, U.S. stocks have picked up right where they left off to start the third. After climbing 1.8 percent last week, the S&P^® 500 index is higher by 2.7 percent since June 30, with positive returns in five of the seven trading days. After reaching a recovery high of 3232 on June 8, the index stumbled badly on June 11, falling 7.1 percent that day alone. But the renewed strength of the past two weeks has erased most of that damage, and the index closed on Friday at 3185, just 1.5 percent below that recovery high. And futures are pointing to a higher opening to start the week. 

In January, the United States and China signed the Phase One trade agreement. China committed to increasing its purchase of American goods and services by $200 billion above 2017 levels over two years, enhance intellectual property and forced technology transfer protections, and liberalized market access for U.S. companies. The agreement kept in place most of the $360 billion of U.S. tariffs on Chinese imports. The deal was hailed as signaling a new chapter in the two-year trade war with China, while critics of the deal said it didn’t go far enough, especially in addressing Chinese industrial subsidies.