Stocks traded sharply higher on Monday, led by strong gains in the tech sector, as Wall Street tried to build on the momentum from last week’s solid performance and shake off a continued rise in coronavirus cases.
The Dow Jones Industrial Average rose 395 points, or 1.5%, while the S&P 500 gained 1.6%. The tech-heavy Nasdaq Composite jumped 2.5% to an all-time high.
There were a few reasons for the bullish lift to start the week:
- The biggest technology companies led the gains with Apple, Amazon, Microsoft and Google-parent Alphabet all climbing more than 2%. Amazon shares also hit $3,000 for the first time. Netflix shares reach an all-time high as well. The Nasdaq-100 — which is made up of the composite’s 100-largest nonfinancial stocks — jumped 2.7% on Monday, bringing its 2020 gains to more than 20%.
- Dealmaking also boosted sentiment. Warren Buffett made his first major deal amid the market turmoil this year, with Berkshire Hathaway buying the natural gas transmission and storage assets from Dominion Energy for about $10 billion including debt. Dominion Energy fell 4%, while Berkshire shares gained almost 2%. Uber shares gained 4.1% after it said it was buying food-delivery app Postmates in an all-stock deal worth $2.65 billion.
- Chinese stocks soared, with the Shanghai Composite jumping more than 5%, as that country continued to open up following their coronavirus outbreak.
- Data from the Institute for Supply Management showed a surprise expansion in the U.S. services sector. The firm’s nonmanufacturing index rose to 57.1 in June, topping a Dow Jones estimate of 50.1.
- Stocks were building on momentum to start the second half. The Dow and S&P 500 rose 3.3% and 4%, respectively, last week and the Nasdaq advanced 4.6% in that time.The market also wrapped up last week its best quarterly performance in decades. The Dow rallied more than 17% for the second quarter while the S&P 500 jumped nearly 20% in that time period. The Nasdaq posted a gain of 30.6% for the quarter.
“The economy is doing a lot better than most of the economists think,” said Jeff Saut, chief investment strategist at Capital Wealth Planning, to CNBC’s “Squawk Box” on Monday. “We may stall here for a while into the fall, into September, October, November, but I think you’re going to get a rocket ship coming in the fall of this year…I think the S&P 500 is going to trade above 4,000.”
Monday’s gains came even as the number of coronavirus cases kept surging globally, raising concerns about the world economy and its recovery from the pandemic.
The World Health Organization said Saturday that more than 200,000 coronavirus cases were confirmed over a 24-hour span, a record. At a regional level, the biggest spike was seen in the Americas, where nearly 130,000 new cases were confirmed.
In the U.S., Florida and Texas reported daily record spikes of 11,445 and 8,258, respectively, on Saturday. Houston Mayor Sylvester Turner said the outbreak is on pace to overwhelm the city’s hospitals in two weeks. Miami Mayor Francis Suarez told ABC this weekend: “It’s clear that the growth is exponential at this point.”
Data compiled by Johns Hopkins University showed that more than 45,000 new cases were confirmed across the U.S. on Saturday.
“We are currently experiencing a spike in Covid-19 cases, particularly in the sunbelt states that were in the vanguard of loosening social distancing restrictions to facilitate the reopening of their economies,” said Marc Chaikin, CEO of Chaikin Analytics, in a post.
“That reopening momentum has been halted by the spike in Covid-19 cases and the temptation to translate this into a bearish outlook for stocks is strong,” he added. “Fatalities have not spiked, however, but are a lagging indicator. Thus the next two weeks are critical for a number of reasons.”
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Stocks jumped on Monday as Wall Street tried to build on the momentum from last week’s solid performance.