Tech leads the way as stocks start month with gains
Wall Street kicked off September with another set of milestones Tuesday, as an afternoon rally carried the S&P 500 and Nasdaq composite to all-time highs.
The S&P 500 bounced back from a modest loss in the early going to finish 0.75% higher a day after the benchmark index wrapped up its fifth monthly gain in a row. More strength in technology stocks and solid gains in retailers and other companies that rely on consumers offset declines in health care companies and elsewhere in the market. Treasury yields fell.
The S&P 500 gained 26.34 points to 3,526.65. The index set several new highs last month. The Dow Jones Industrial Average recovered from an early, 139-point skid, climbing 215.61 points, or 0.8%, to 28,645.66.
The Nasdaq composite rose 164.21 points, or 1.4%, to 11,939.67. The Russell 2000 index of smaller company stocks also bounced back from an sluggish start, adding 16.71 points, or 1.1%, to 1,578.58.
Terry Sandven, chief equity strategist at U.S. Bank Wealth Management, said stocks “have fast become a buy high, sell higher market, and for good reason.” Sandven said investors are right to take a “glass half full” view of the strengths underlying the market, which could continue to trend upward.
“This has largely been a technology-driven market, and as tech goes so will the broad index,” he said.
The stock market has continued its remarkable turnaround since plunging nearly 34% early this year as the coronavirus pandemic knocked the economy into a recession. The S&P 500 closed out August with a 7% gain, its best showing since April. It’s now up 9.2% this year, while the tech-driven rally has powered the Nasdaq to a gain of more than 33%.
Encouraging data as broad swaths of the economy have reopened this summer have helped stoke investor optimism about a recovery. The question is whether that’s going to be enough to keep the market moving higher when so much uncertainty remains about the pandemic’s lasting impact on companies and consumers.
Whether the market can sustain its upward trajectory in September, traditionally the worst month for stocks, will depend on how several potentially market-moving variables play out the next few months. Will Congress reach a deal on another economic stimulus bill? Will coronavirus infections surge as students in states where schools are due to reopen go back to the classroom? How will the elections shake out?
Traders have been favoring technology stocks as the pandemic has dragged on and forced millions of people to rely more than ever on internet-connected devices and online services for work, home schooling and communication.
Apple climbed 4% on Tuesday. It’s up more than 82% this year. Meanwhile, Zoom Video Communications soared 40.8%, a day after the nowubiquitous video conferencing service reported another quarter of explosive growth.
Walmart was among the biggest gainers in the S&P 500 as investors welcomed news of the retail giant’s debut later this month of a service offering members same-day delivery, fuel discounts and other perks. The stock rose 6.3%.
Stocks perked up Tuesday following the release of some better-than-expected economic data. The Commerce Department said U.S. construction spending edged higher in July, breaking a string of losses due to disruptions caused by the pandemic. And the Institute for Supply Management said its latest manufacturing index increased last month, reflecting a faster pace of expansion by American factories.
The yield on the 10-year Treasury fell to 0.68% from 0.71% late Monday.
Oil prices rose. Benchmark U.S. crude oil for October delivery rose 15 cents to $42.76 a barrel. Brent crude oil for November delivery rose 30 cents to $45.58 a barrel.