S&P 500 gains more with Microsoft, other tech companies leading the way

Stocks started August with more gains, and a worldwide rally on Monday sent Wall Street back to where it was just a couple days after it set its record earlier this year.

European manufacturing strengthened in July, which helped to lift global markets

A woman wearing a mask passes a sign on Wall Street during the coronavirus pandemic on June 30. (Mark Lennihan/The Associated Press)

Stocks started August with more gains, and a worldwide rally on Monday sent Wall Street back to where it was just a couple days after it set its record earlier this year.

The S&P 500 added another 0.7 per cent onto its four-month winning streak, with Big Tech once again leading the way. The benchmark index rose 23.49 points to 3,294.61 to get within 3 per cent of its record for the first time since February. Canadian markets are closed because of the Civic Holiday today. 

The Dow Jones Industrial Average rose 236.08 points, or 0.9 per cent, to 26,664.40. The gains for tech stocks, particularly Microsoft and Apple, pushed the Nasdaq composite up 157.52, or 1.5 per cent, to 10,902.80 — another record.

Helping to launch markets higher were reports that showed manufacturing activity strengthened across Europe in July by more than economists expected. The gains built higher after a separate report showed U.S. manufacturing growth also accelerated last month at a faster pace than expected.

The data added to evidence that the global economy halted its free fall from earlier this year, at least temporarily. Earlier on Monday, a private survey showed China's manufacturing activity also grew at a faster rate in July than expected.

Such budding improvements have helped the S&P 500 nearly erase its pandemic-caused plunge, which had reached nearly 34 per cent at one point. So have massive amounts of aid for the economy from the Federal Reserve.

Still, "there is clear confusion among investors," said Mark Hackett, chief of investment research at Nationwide. Even though the stock market is indicating a steady recovery, he said big moves in the foreign-currency and gold markets are "suggesting greater disruption."

U.S. relief effort talks resume

In Washington, meanwhile, slow grinding negotiations on a huge relief effort for the U.S. economy are set to resume on Monday.

Both the Trump administration negotiating team and top Capitol Hill Democrats reported progress over the weekend, though differences remain. At least several more days of talks are expected.

The discussions have taken on more urgency because $600 US in weekly benefits from the federal government for laid-off workers have expired, just as the number of layoffs ticks up across the country amid a resurgence of coronavirus cases and business restrictions.

Big Tech has remained almost immune to such concerns, though, driving higher through the pandemic on expectations that it can continue to grow.

Short video app TikTok says it has tens of millions of users in the U.S. and hundreds of millions globally. Microsoft recently confirmed that it's in talks to buy the U.S. arm of the Chinese-owned app. (AFP/Getty Images)

Microsoft jumped 5.6 per cent after it confirmed that it's in talks to buy the U.S. arm of TikTok, a Chinese-owned video app that is very popular but that also has drawn the White House's scrutiny.

Microsoft said its CEO, Satya Nadella, has talked with U.S. President Donald Trump about it, and the tech giant expects the negotiation with TikTok to end no later than Sept. 15 either with a deal or not.

Apple added 2.5 per cent, piling more gains onto its 10.5 per cent gain Friday following a blowout report showing that its profits during the spring easily topped Wall Street's expectations.

It's the latest in a cavalcade of companies to report earnings that weren't quite as bad as analysts were expecting for the spring.

With nearly two-thirds of profit reports in for S&P 500 companies, 84 per cent have reported stronger results than expected, according to financial data and analytics firm FactSet. If it stays at that level, it would be the highest since FactSet's records began in 2008.

Health-care stocks were also strong, with Varian Medical surging 22 per cent for the biggest gain in the S&P 500. Germany-based Siemens Healthineers said it will buy the cancer therapy and research company in a deal worth roughly $16.4 billion.

Global indexes up

Germany's DAX stock index returned 2.7 per cent following the strong reports on European manufacturing. France's CAC 40 rose 1.9 per cent, and the FTSE 100 in London gained 2.3 per cent.

In Asia, Japan's Nikkei 225 jumped 2.2 per cent, South Korea's Kospi edged up 0.1 per cent and the Hang Seng in Hong Kong slipped 0.6 per cent. Stocks in Shanghai rose 1.8 per cent.

The yield on the 10-year Treasury rose to 0.55 per cent from 0.53 per cent late Friday.

Benchmark U.S. crude rose 1.8 per cent to $41.01 per barrel. Brent crude, the international standard, was up 1.4 per cent at $44.15 per barrel.