Wall Street rises but pares gains after news of partial U.S.-China deal

NEW YORK (Reuters) – U.S. stocks ended more than 1% higher on Friday though well off the day’s highs after the announcement of a partial trade deal between the United States and China.

Indexes cut their gains late in the session as the deal was announced amid worries over the possibility of further flare-ups before the agreement is finalized, strategists said.

President Donald Trump, speaking to reporters after talks with Chinese Vice Premier Liu He, said the United States and China had come to a substantial phase-1 trade deal, reaching agreement on intellectual property, financial services and big agricultural purchases.

The preliminary, partial deal was the biggest step toward resolving a 15-month tariff war between the world’s two largest economies.

The market had risen in recent days due to optimism for an agreement and the S&P 500 .SPX was up as much as about 1.9% earlier in the session.

“The main reason the market rallied the past couple of days was hope that there would be an agreement, even a small agreement, and that this trade war would be done for the foreseeable future,” said Michael O’Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.

“It looks like while there is an agreement, this is still going to … drag out and be an issue.”

Top-level discussions between the two countries concluded their second day on Friday.

Cyclicals were among the day’s best-performing groups, with the S&P industrial index .SPLRCI up about 2% ahead of the third-quarter earnings season, which is set to begin next week.

The Dow Jones Industrial Average .DJI rose 319.92 points, or 1.21%, to 26,816.59, the S&P 500 .SPX gained 32.14 points, or 1.09%, to 2,970.27 and the Nasdaq Composite .IXIC added 106.27 points, or 1.34%, to 8,057.04.

Indexes also gained for the week, with the

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