S&P 500 wraps up fourth win­ning month

San Francisco Chronicle - - BUSINESS - By Stan Choe Stan Choe is an As­so­ci­ated Press writer.

NEW YORK — Big Tech con­tin­ues to steam­roll through the pan­demic, and strong gains for some of the mar­ket’s most in­flu­en­tial com­pa­nies on Fri­day helped Wall Street close out its fourth straight win­ning month.

The S&P 500 rose 24.90 points, or 0.8%, to 3,271.12 fol­low­ing blowout profit re­ports from Ap­ple and sev­eral other tech ti­tans. The gains didn’t come eas­ily, though, and the stock mar­ket flipped up and down through the day amid wor­ries about the econ­omy and whether Con­gress can find agree­ment on more aid for it.

The Dow Jones industrial av­er­age was down as many as 300 points before fin­ish­ing the day up 114.67, or 0.4%, at 26,428.32. The Nas­daq com­pos­ite jumped 157.64, or 1.5%, to 10,745.27 on the strength for tech stocks, which also ac­cel­er­ated in the last hour of trad­ing.

De­spite the gains, cau­tion was clearly present across mar­kets as the coron­avirus pan­demic con­tin­ues to cloud the econ­omy’s prospects. The 10­year Trea­sury yield touched its low­est level since it dropped to a record low in March. Gold also con­tin­ued its record­set­ting run as in­vestors searched for safety, while the ma­jor­ity of stocks in the S&P 500 sank.

Among the lag­gards were com­pa­nies that most need the econ­omy to get back to “nor­mal” and the pan­demic to sub­side, in­clud­ing many in the travel in­dus­try.

Ex­pe­dia Group slumped 4.6% after it re­ported weaker re­sults for the lat­est quar­ter than Wall Street ex­pected. The com­pany’s CEO, Peter Kern, called it “likely the worst quar­ter the travel in­dus­try has seen in modern his­tory.”

En­ergy com­pa­nies were also weak as the pan­demic sucked away de­mand for oil. Chevron dropped 2.7% after it re­ported a worse loss for its lat­est quar­ter than Wall Street ex­pected.

The econ­omy cratered to its worst quar­terly per­for­mance on record dur­ing the spring, and wor­ries are high that con­tin­u­ing waves of coron­avirus in­fec­tions may halt what had been a bud­ding re­cov­ery. An ex­tra $600 in weekly un­em­ploy­ment ben­e­fits from the U.S. gov­ern­ment is ex­pir­ing with July’s end, and Con­gress con­tin­ues to ar­gue about how to pro­vide more support for the econ­omy.

Whether Wash­ing­ton can agree on more aid for out­of­work Amer­i­cans — and quickly — is the big­gest risk for the mar­ket in the near term, said Yung­yu Ma, chief in­vest­ment strate­gist at BMO Wealth Man­age­ment.

“If it doesn’t hap­pen in short or­der, there’s going to be a lot of dis­ap­point­ment and un­ease,” he said. “I think law­mak­ers are per­haps un­der­es­ti­mat­ing how quickly things could spi­ral down­ward with­out an ex­ten­sion in place. It would take only a few weeks before mil­lions of peo­ple are cash strapped.”

The S&P 500 made its fi­nal leg back into pos­i­tive ter­ri­tory for the day as top Democrats an­nounced a meet­ing with White House rep­re­sen­ta­tives for Satur­day morn­ing to con­tinue talks.

Also help­ing to prop up the S&P 500 was the power of big tech­ori­ented stocks. Ama­zon, Ap­ple and Face­book each re­ported stronger profit for the lat­est quar­ter than Wall Street ex­pected late Thurs­day, and each rose at least 3.7% in their first trad­ing fol­low­ing the re­ports. They’re three of the big­gest com­pa­nies in the world, mak­ing up nearly 13% of the S&P 500 them­selves, so their move­ments hold great sway over in­dexes.

Ap­ple was par­tic­u­larly in­flu­en­tial, rock­et­ing up 10.5% fol­low­ing what Wed­bush an­a­lyst Daniel Ives called a “Pi­casso­like per­for­mance” for its lat­est quar­ter.

Google’s par­ent com­pany, another be­he­moth in the mar­ket, also re­ported stronger profit than an­a­lysts had fore­cast, but its stock stum­bled.

Not only are Big Tech com­pa­nies grow­ing faster than the rest of the mar­ket, some in­vestors have even be­gun see­ing them as safer bets than other stocks be­cause the pan­demic is push­ing more peo­ple on­line and di­rectly into their wheel­houses. It’s a far cry from 20 years ago when tech stocks were seen as the riski­est in­vest­ments.

The strength for tech is one of the reasons the S&P 500 rose 5.5% in July, its best month since April. Con­tin­ued, mas­sive amounts of aid from the Fed­eral Re­serve has been another linch­pin. The in­dex has climbed back within 3.4% of its record set in Fe­bru­ary after ear­lier be­ing down nearly 34%.

The gains came even though com­pa­nies have broadly been re­port­ing sharp de­clines in their prof­its, as in­vestors hope that a vac­cine can be de­vel­oped in the next year to cor­ral the pan­demic and get the econ­omy closer to nor­mal.

“The mar­ket knows earn­ings are going to be ter­ri­ble now, with a few select ex­cep­tions, for the ma­jor­ity of com­pa­nies,“Ma said. “What’s re­ally hold­ing up the eq­uity mar­kets is this idea that ‘Yes, it’s a ter­ri­ble sit­u­a­tion now, but the out­look for 2021 and be­yond is markedly bet­ter.’ ”

Other mar­kets have not shown as much ex­u­ber­ance, though. The yield on the 10­year Trea­sury ticked down to 0.53% from 0.54% late Thurs­day. It touched its low­est level since March 9, the day it dropped to its record in­tra­day low just be­low 0.34%. The yield tends to move with in­vestors’ ex­pec­ta­tions for the econ­omy and in­fla­tion.

Gold for delivery in De­cem­ber, the most ac­tively traded con­tract, rose $19.10 to set­tle at $1,985.91 per ounce after ear­lier climb­ing as high as $2,005.40.

Bench­mark U.S. crude oil rose 35 cents to set­tle at $40.27 a bar­rel Fri­day. Brent crude rose 37 cents to $43.31 a bar­rel.

Eu­ro­pean and Asian mar­kets closed broadly lower.

Lee Jin-man / As­so­ci­ated Press

A cur­rency trader walks near the screens in Seoul. Asian mar­kets dropped Fri­day as Wall Street rose.

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