Wall Street gains on strong services sector data, China-led recovery hopes

Wall Street’s main indexes were set to open higher on Monday, with the Nasdaq eyeing another record level, as bets on China leading the revival from a coronavirus-driven downturn helped investors look past a surge in new cases of COVID-19 at home.

FILE PHOTO: Traders wearing masks work, on the first day of in person trading since the closure during the outbreak of the coronavirus disease (COVID-19) on the floor at the New York Stock Exchange (NYSE) in New York, U.S., May 26, 2020.

REUTERS: Wall Street’s major indexes climbed on Monday as data showing unexpected growth in the U.S. services sector last month and optimism over China’s economic revival helped investors look past a surge in new cases of COVID-19 at home.

The ISM’s non-manufacturing activity index jumped to 57.1 in June, almost returning to pre-pandemic levels, but a recent surge in COVID-19 cases in the United States has threatened the emerging recovery.

During Asian hours, Chinese stocks jumped more than 5per cent on ample liquidity, cheap funding and expectations of a faster and a better bounce-back in business activity than other major countries that are still battling the coronavirus crisis.

A slew of upbeat U.S. data, including a record rise in June payrolls, has powered the Nasdaq to all-time highs and brought the S&P 500 and the Dow about 6per cent and 11per cent below their respective peaks from February.

“Investors are more focused on what the other side of this pandemic looks like, as opposed to the short-term risks of shutdowns,” said Matt Lindholm, managing director – investment strategies at CAZ Investments in Houston.

A sharp jump in COVID-19 cases recently in the United States has cast a shadow over the strong rally in stocks as many states have curtailed their reopening plans, threatening to derail the economic recovery.

During the Independence Day weekend, several states reported a record increase in new infections, with Florida surpassing the highest daily tally reported by any European country during the peak of the outbreak.

“July is going to be critical in making sure the virus can be contained and in a way that the economic recovery can continue and if Democrats or Republicans get together to continue to supply a type of fiscal stimulus that can continue to support the economy,” said Keith Buchanan, senior portfolio manager at GlobAlt Investments in Atlanta.

At 11:09 a.m. ET, the Dow Jones Industrial Average was up 366.02 points, or 1.42per cent, at 26,193.38, the S&P 500 was up 48.09 points, or 1.54per cent, at 3,178.10. The Nasdaq Composite was up 236.36 points, or 2.32per cent, at 10,443.99.

Ten of the 11 major S&P sectors were trading higher, with technology providing the biggest boost to the benchmark S&P 500.

Among individual shares, Tesla Inc surged 9per cent, rising for the fifth session as JPMorgan bumped up its price target for the electric carmaker’s stock following better-than-expected quarterly deliveries.

Uber Technologies Inc climbed 5.4per cent after the ride-sharing company agreed to buy food-delivery app Postmates Inc in a US$2.65-billion all-stock deal.

Dominion Energy Inc and Duke Energy Corp fell 7.5per cent and 2.5per cent, respectively, after the energy firms abandoned the US$8-billion Atlantic Coast Pipeline project after a long delay to clear legal roadblocks almost doubled its estimated cost.

Advancing issues outnumbered decliners by a 3.21-to-1 ratio on the NYSE and by a 2.51-to-1 ratio on the Nasdaq.

The S&P index recorded 36 new 52-week highs and no new low, while the Nasdaq recorded 133 new highs and nine new lows.

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