Tech Stocks Lead Index Rebound -- WSJ
September 15 2020 - 3:02AM
Dow Jones News
By Alexander Osipovich and Joe Wallace
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (September 15, 2020).
A rebound in technology shares lifted U.S. stocks Monday,
helping major indexes recover after last week's pullback.
Deal activity at software giant Oracle and chip maker Nvidia
contributed to the bounce in tech stocks. Both companies' shares
rallied more than 4% after Oracle won the bidding for the U.S.
operations of video-sharing app TikTok and Nvidia agreed to buy
British chip-designer Arm Holdings in a potentially transformative
deal.
The tech-heavy Nasdaq Composite jumped 203.11 points, or 1.9%,
to 11056.65 after last week suffering its biggest one-week decline
since the March market crisis.
The Dow Jones Industrial Average climbed 327.69, or 1.2%, to
27993.33, while the S&P 500 advanced 42.57, or 1.3%, to
3383.54.
Monday's advance extends a spell of outsize moves in both
directions for U.S. stock indexes, much of it driven by shares of
large technology companies that have powered the market's recovery
since the spring.
Stocks like Apple and Microsoft had soared in recent months,
with investors betting tech companies were better positioned to
handle the Covid-19 pandemic than more traditional industries.
Rock-bottom interest rates also pushed investors into riskier
assets. But the tech rally abruptly lost steam this month. Even
with Monday's gains, the Nasdaq remains more than 8% below the
record highs it reached in early September.
Mike Dowdall, a portfolio manager at BMO Global Asset
Management, said he was being cautious on tech stocks because of
their lofty valuations. "Even though the economic story is really
strong, it's hard to step into that trade at the moment," he
said.
Stocks have been also buffeted this month by uncertainty about
the U.S. presidential election and worries that the economic
recovery, which appeared vigorous earlier this summer, could be
slowing.
"We're shifting into an environment of lower returns and higher
volatility and this is not inconsistent with that," said James
McCormick, global head of desk strategy at NatWest Markets. He
added: "I think the upside is going be a bit capped here until we
get through some of these events and risks."
Investor sentiment was boosted by the resumption of clinical
trials of AstraZeneca's experimental coronavirus vaccine in the
U.K. Studies were put on pause globally after a person who received
the vaccine had an unexplained illness. Trials in other countries,
including the U.S., remain on hold.
"There's a bit more positivity as regards vaccines," said Robert
Carnell, head of research for Asia-Pacific at ING Groep. "The
resumption of AstraZeneca trials will be seen in that light."
Gains were broad Monday, with all 11 of the S&P 500's
sectors advancing. The tech sector was among the biggest gainers
with a 2.1% climb.
Oracle shares rose $2.46, or 4.3%, to $59.46 after it beat
Microsoft in the race for TikTok, according to people familiar with
the matter. Nvidia shares gained $28.31, or 5.8%, to $514.89 after
it agreed to buy Arm Holdings for more than $40 billion from
SoftBank Group Corp.
Investors welcomed news that ViacomCBS agreed to sell CNET Media
Group to Red Ventures, pushing Class B shares in the entertainment
giant up 69 cents, or 2.4%, to close at $29.73.
Gilead Sciences shares rose $1.44, or 2.2%, to $66.34 after the
pharmaceutical company said it would pay $21 billion to buy biotech
Immunomedics and its prized breast-cancer drug.
Citigroup shares dropped $2.85, or 5.6%, to $48.15 after The
Wall Street Journal reported that federal regulators were preparing
to reprimand the bank for failing to improve its risk-management
systems.
Elsewhere, the Stoxx Europe 600 rose 0.1%. In Asia, China's
Shanghai Composite Index gained 0.6%.
Write to Alexander Osipovich at alexander.osipovich@dowjones.com
and Joe Wallace at Joe.Wallace@wsj.com
(END) Dow Jones Newswires
September 15, 2020 02:47 ET (06:47 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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