By Alexander Osipovich and Anna Isaac
U.S. stocks rose on Monday, lifted by a surge in technology
stocks like Apple and Microsoft, as well as signs that the rate of
new coronavirus infections could be slowing.
The Dow Jones Industrial Average gained 236 points, or 0.9%, as
of the close of trading in New York, getting August off to a strong
start. The index climbed 2.4% in July. Trading volumes are expected
to slide in coming weeks with the onset of the summer vacation
season, leading to a potential increase in volatility.
The S&P 500 rose 0.7%, while the tech-heavy Nasdaq Composite
climbed 1.5%, giving the benchmark a fresh record.
Investors have piled into technology stocks in recent weeks,
particularly companies that seem to benefit from stay-at-home
orders. Robust earnings from tech companies and virus-fueled
disruptions to traditional sectors, like airlines, retail and
manufacturing, have widened the gap between Big Tech and everyone
else.
"We expect to see that bifurcation in the market until we get
some sort of solution for how to move past the virus issue," said
Charlie Ripley, senior investment strategist at Allianz Investment
Management.
Apple shares gained 2.5% on Monday. Microsoft shares climbed
5.6%, a record close, after the software giant said over the
weekend that it would move forward with plans to buy the U.S.
operations of the hit video-sharing app TikTok. The companies'
gains helped make tech stocks the best-performing sector of the
S&P 500 on Monday.
Meanwhile, the U.S. registered its lowest number of new Covid-19
infections in weeks, spurring investors' hopes that the growth in
cases could be slowing. The U.S. reported more than 47,000 new
coronavirus cases, the smallest daily increase in almost four
weeks, after posting a record number of new infections in the month
of July.
"A couple of weeks ago, U.S. cases were rising by 40-50% on a
weekly basis. They're now falling. Not as fast as they might
appear, because testing has dropped, but they are still lower and
so is the rate of hospitalization. Markets like that," said Ian
Shepherdson, chief economist at Pantheon Macroeconomics.
New data showed U.S. manufacturing activity grew in July, a sign
that the sector is recovering after the Covid-19 pandemic forced
much of the U.S. economy to an abrupt halt. The Institute for
Supply Management's manufacturing index rose to 54.2 last month,
from 52.6 in June. Economists had expected the reading to come in
at 53.8. Anything above 50 represents an expansion in activity.
Overseas stocks rose after similar data pointed to a
manufacturing recovery. The pan-continental Stoxx Europe 600 rose
2.1%, its biggest gain in more than a month, bolstered by survey
data showing signs of recovery in euro area factories. In China,
the Shanghai Composite Index rose 1.8% after a private gauge of
manufacturing activity on the mainland rose in July to its highest
level in more than nine years.
Investors were watching whether political leaders in Washington
would overcome a partisan divide and deliver further fiscal support
for the American economy. Democratic leaders and White House
officials planned to meet on Monday to discuss a new economic
relief package, including aid to replace the federal $600-a-week
boost to unemployment benefits that expired Friday. The White House
had hoped to pass a short-term extension of the federal
unemployment insurance, but Democrats want to negotiate a
comprehensive package of relief, including state and local aid.
"The slowness with which Washington is coming to an agreement on
a fiscal policy shows some fatigue. A deal will likely come, but
after some big fiscal cliffs have been passed," said James
McCormick, a strategist at NatWest Markets.
Earlier, shares of ADT soared about 64% after the security
company said Google would invest $450 million to acquire 6.6%
ownership in ADT, and the companies entered into a long-term
partnership to create smart home security offerings.
Marathon Petroleum shares rose 1.3% after the oil refiner said
it had agreed to sell its gas stations to the owners of the
7-Eleven convenience store chain for $21 billion in the largest
U.S. energy-related deal of the year.
Carnival shares slid 4.7% after the cruise operator, whose
business has been battered by the coronavirus pandemic, said it was
delaying the relaunch of its AIDA cruises from Germany.
Among European equities, HSBC Holdings slid 2.9% in London. The
bank's second-quarter profit fell 96% as the disruption caused by
the pandemic complicated its efforts to refocus on Asia while
dealing with the rising U.S.-China political tensions.
The ICE Dollar Index, which tracks the greenback against a
basket of other major currencies, ticked up 0.3% while remaining
near its lowest level in over two years. The dollar had made a
sharp U-turn this summer following a long rally, and its slide
added further support to the booming market rally, lifting U.S.
stocks and commodities.
In bonds, the yield on the benchmark 10-year U.S. Treasury
ticked up to 0.558%, from 0.536% Friday.
--Frances Yoon contributed to this article.
Write to Alexander Osipovich at alexander.osipovich@dowjones.com
and Anna Isaac at anna.isaac@wsj.com
(END) Dow Jones Newswires
August 03, 2020 16:21 ET (20:21 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.