Nasdaq sets record as stocks rise around the world
NEW YORK — Stocks rallied worldwide on Monday as investors bet that the economy can continue its dramatic turnaround despite all the challenges ahead.
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 European economies.
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 also are 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 hot spots 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 also could 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.
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.
Big tech-oriented companies 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 share.
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 unit.
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 a barrel.