Nasdaq Sets New Record Monday 07/06 16:22
Stocks rallied worldwide on Monday as investors bet that the economy can
continue its dramatic turnaround despite all the challenges ahead.
NEW YORK (AP) -- Stocks rallied worldwide on Monday as investors bet that
the economy can continue its dramatic turnaround despite all the challenges
The S&P 500 rose 1.6%, following up on similar gains in Europe and Asia, and
clawed back to within 6.1% of its record set in February. The headliner was
China's stock market, which leaped 5.7% for its biggest gain since 2015, when
it was in the midst of a bubble bursting. Treasury yields also ticked higher in
a signal of growing optimism after reports showed improvements in the U.S. and
Stocks of the biggest companies once again led the way, and strength for
Apple, Amazon and other tech-oriented titans helped lift the Nasdaq composite
226.02 points, or 2.2%, to close at a record high of 10,433.65.
The Dow Jones Industrial Average rose 459.67 points, or 1.8%, to 26,287.03.
The S&P 500 rose 49.71 points to 3,179.72 for its third gain of at least 1.5%
in the last five days.
They're the latest buoyant moves for markets, where investors are focusing
more on recent improvements in the economy and all the stimulus that central
banks and governments are supplying than on how much pain still remains.
Investors are also continuing to sidestep the mounting number of known
coronavirus infections, at least for now.
"The economic damage isn't going to be as dire and severe as was initially
predicted," said Peter Essele, head of portfolio management for Commonwealth
Financial Network. "That helps explain the rebound."
The worry is that if the pandemic keeps worsening, with hotspots stretching
across the U.S. South and West, it could scare shoppers and businesses away
from spending. The worst-case scenario for markets is that governments resume
lockdowns implemented during the spring and choke off the budding economic
recovery. Either way, many economists expect the global economy to take years
before returning to its output from before the pandemic.
The huge spending efforts to resuscitate the economy could also lead to a
reckoning in the future. "We have now mortgaged our entire future to try and
withstand this downturn," Essele said.
At some point, the buildup in debt for the U.S. government could lead to
higher taxes and interest rates. But markets generally see that as a potential
problem for another day.
For now, the trend is still upward. Monday's rally follows last week's 4%
gain for the S&P 500, which itself helped cap the best quarter for the U.S.
stock market since 1998. It's a whiplash turnaround from the market's earlier
sell-off, which sent the S&P 500 down nearly 34% from its record.
A report released Monday morning showed that U.S. services industries
snapped back to growth in June. The results were much stronger than economists
expected. They also followed reports from last week that showed U.S. employers
added more workers than they cut for the second straight month and that U.S.
manufacturing returned to growth in June.
Miner Freeport-McMoRan jumped 10.9% for the largest gain in the S&P 500
after it said sales of copper and gold were stronger in the latest quarter than
it had earlier forecast.
Big tech-oriented companies also continued their dominance amid expectations
their growth can roll on almost regardless of the economy's performance. Apple
gained 2.7%, Microsoft rose 2.2% and Amazon climbed 5.8% to top $3,000 per
The immense size of these companies also gives their stocks' movements much
larger sway over market indexes. The Russell 2000 index of smaller stocks was
up a more modest 0.8%.
Some dealmaking also helped to lift markets.
Berkshire Hathaway, led by famed bargain hunter Warren Buffett, has agreed
to buy Dominion Energy's operations for moving and storing natural gas.
Berkshire Hathaway, which has a reputation for waiting until prices reach
attractive lows before pouncing, will pay roughly $4 billion in cash under the
deal, as well as assume $5.7 billion in debt.
Berkshire Hathaway's Class B shares rose 2.2%. Dominion Energy fell 11%.
While announcing the sale, it also said that it and Duke Energy were canceling
a controversial $8 billion natural-gas pipeline project.
Uber rose 6% after it said it will buy food-delivery business Postmates for
$2.65 billion in stock. The deal would fold Postmates in with Uber's Uber Eats
The yield on the 10-year Treasury rose to 0.68% from 0.67% late Thursday.
Markets were closed Friday for Independence Day. The yield tends to move with
investors' expectations for the economy and inflation.
In Europe, Germany's DAX returned 1.6%, and France's CAC 40 rose 1.5%. The
FTSE 100 in London added 2.1%. Retail sales rebounded in May in the 19
countries that use the euro, while car sales in Britain picked up in June as
lockdown measures were eased.
In Asia, Japan's Nikkei 225 rose 1.8%, South Korea's Kospi gained 1.7% and
the Hang Seng in Hong Kong jumped 3.8%.
Benchmark U.S. crude oil for August delivery fell 2 cents to settle at
$40.63 a barrel. Brent crude oil for September delivery rose 30 cents to $43.10