Wall Street posts solid gains af­ter surge in deals

San Francisco Chronicle Late Edition - - BUSINESS - By Alex Veiga and Damian J. Troise Alex Veiga and Damian J. Troise are As­so­ci­ated Press writ­ers.

Wall Street kicked off the week with a broad rally Mon­day, claw­ing back much of the stock mar­ket’s losses from last week.

The S&P 500 rose 1.3%, led by gains in tech­nol­ogy, health care and fi­nan­cial stocks. Small com­pany stocks were among the big­gest gain­ers. The rally re­versed a big slice of the in­dex’s 2.5% slide last week, when the S&P 500 posted its big­gest weekly de­cline since June. Trea­sury yields were mostly higher.

The mar­ket’s strong start to the week is a re­ver­sal af­ter a mostly down­ward shift in the mar­ket this month led by a sell­off in high­fly­ing tech stocks that many an­a­lysts said was long over­due.

“We’ve been due for a lit­tle bit of a pull­back, and we’ve ex­pe­ri­enced that so far in Septem­ber,” said Terry Sand­ven, chief eq­uity strate­gist at U.S. Bank Wealth Man­age­ment. “We still have a pos­i­tive out­look into the end of the year, but we be­lieve mar­ket chop will be the norm.”

The S&P 500 gained 42.57 points to 3,383.54. The Dow Jones In­dus­trial Average rose 327.69 points, or 1.2%, to 27,993.33. The Nas­daq, which in­cludes many tech stocks, picked up 203.11 points, or 1.9%, to 11,056.65. Small com­pany stocks climbed more than the rest of the mar­ket, send­ing the Rus­sell 2000 higher. The in­dex rose 39.70 points, or 2.7%, to 1,536.97.

Sev­eral big cor­po­rate deals helped put in­vestors in a buy­ing mood Mon­day. Santa Clara’s Nvidia jumped 5.8% af­ter an­nounc­ing plans to buy fel­low chip­maker Arm Hold­ings in a deal worth up to $40 bil­lion. Red­wood City’s Or­a­cle climbed 4.3% af­ter the busi­ness soft­ware maker beat out Mi­crosoft to be­come the “trusted tech­nol­ogy provider” of TikTok, the pop­u­lar video­shar­ing app based in China. And the stock of Immunomedi­cs nearly dou­bled af­ter the can­cer drug spe­cial­ist agreed to be ac­quired by Foster City’s Gilead Sciences in a $21 bil­lion deal. Gilead shares rose 2.2%.

As­traZeneca added 0.5% fol­low­ing news over the week­end that clin­i­cal tri­als for the phar­ma­ceu­ti­cal com­pany’s coro­n­avirus vac­cine will re­sume af­ter be­ing paused due to a re­ported side­effect in a pa­tient in the U.K. The vac­cine is seen as one of the strong­est con­tenders among the dozens of coro­n­avirus vac­cines be­ing tested.

Wall Street has been rid­ing a surge in volatil­ity the past cou­ple of weeks as in­vestors turned cau­tious fol­low­ing a five­month rally for stocks fu­eled largely by a run­up in big tech com­pa­nies.

The pan­demic ac­cel­er­ated the use of on­line ser­vices by busi­nesses and in­di­vid­u­als, driv­ing shares of Ap­ple, Ama­zon, Mi­crosoft, Zoom Video and other tech com­pa­nies sharply higher through the sum­mer. But con­cerns that the high­fly­ing tech stocks had soared too high have put in­vestors in a sell­ing mood in Septem­ber. The S&P 500 is down 3.3% so far this month, while the Nas­daq has pulled back 6.1%.

“We know that mo­men­tum is go­ing to slow a lit­tle bit, that’s ex­pected,” said Esty Dwek, head of global mar­ket strat­egy at Natixis In­vest­ment Man­agers. “It wasn’t sup­posed to be, or it was never go­ing to be a straight line with­out any bumps in the road.”

De­spite their Septem­ber stum­ble, stocks re­tain much of their gains since set­ting record highs less than two weeks ago. The S&P 500 is up 4.7% for the year. The Nas­daq is up 23.2%. Even so, an­a­lysts ex­pect more volatil­ity for stocks in the months ahead as the mar­ket nav­i­gates un­cer­tainty over the out­come of the elec­tion, pes­simism that Democrats and Repub­li­cans in Wash­ing­ton will be able to reach a deal to send more aid to un­em­ployed work­ers and an econ­omy still strug­gling amid the pan­demic.

One big fac­tor that re­mains in the stock mar­ket’s fa­vor is the Fed­eral Re­serve, which con­tin­ues to pump aid into the econ­omy. It has slashed short­term in­ter­est rates to record lows and bought up all kinds of bonds to sup­port mar­kets. It also said re­cently it will keep de­liv­er­ing stim­u­lus even if in­fla­tion rises above its tar­get level, as long as in­fla­tion had been well un­der it be­fore then.

In­vestors will be fo­cused this week on the cen­tral bank’s lat­est in­ter­est rate and eco­nomic pol­icy up­date on Wed­nes­day, fol­low­ing a two­day meet­ing of pol­i­cy­mak­ers. Af­ter the July meet­ing, the Fed kept its key in­ter­est rate un­changed at a record low near zero. Fed pol­i­cy­mak­ers also pledged to keep rates low un­til they are con­fi­dent that the econ­omy has weath­ered the pan­demic­in­duced re­ces­sion.

Low rates of­ten act like steroids for Wall Street, en­cour­ag­ing in­vestors to pay higher prices for stocks rel­a­tive to cor­po­rate prof­its, which can ben­e­fit high­growth stocks in par­tic­u­lar.

The yield on the 10­year Trea­sury rose to 0.68% from 0.67% late Fri­day.

Euro­pean mar­kets ended mixed, while Asian mar­kets closed broadly higher.

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