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Wall Street’s main indices rose on Monday as Microsoft announced its plans to buy TikTok’s U.S. operations and a clutch of upbeat quarterly earnings reports lifted sentiment in the absence of a fiscal coronavirus relief deal.
Wall Street opened in green on Monday, the first trading day of August, as the market tried to build on its four-month winning streak. The Dow Jones Industrial Average (INDEXDJX: .DJI) rose by 219 points or 0.8%. The Nasdaq Composite (INDEXNASDAQ: .IXIC) went up by 1.5% to an all-time high. The S&P 500 (INDEXSP: .INX)improved by 0.8%. But let’s see which factors helped the most for this rise. First, we have to mention that tech stock (including Apple and Microsoft) continued their great performance relative to the rest of the market.
For example, Apple Inc (NASDAQ: AAPL) is rising 4.1% to its all-time high. Netflix Inc (NASDAQ: NFLX) also went up by 1.36%. These stocks have all went through an amazing jump in 2020 while the S&P 500 is up just 1.3% in that time period.
Microsoft Corporation (NASDAQ: MSFT), another tech behemoth in addition to Apple, climbed over 4% after confirming reports about being in talks to buy social video app TikTok in the U.S. The company stated it will press ahead with talks to buy TikTok’s U.S. operations from the video app’s Chinese owner ByteDance in spite of the fact that Donald Trump was pretty reserved about this. This was said after a conversation between chief executive Satya Nadella and the U.S. president. The U.S. technology group also confirmed that the potential transaction would include TikTok’s business in Canada and its Australia and New Zealand operations, amid growing scrutiny of the app globally including by Australian officials.
Pharma Stock on the Rise on COVID-19 Therapy Expectations
On the other hand, we have not only Apple and Microsoft but also pharma company Eli Lilly and Co (NYSE: LLY) which stock rose by 2.3% after in said it started off a phase 3 trial of LY-CoV555, an experimental coronavirus antibody treatment that may prevent the virus spreading among U.S. nursing home staffers and residents.
And let’s not forget the fact that shares went on their rise due to better-than-expected manufacturing data. The Institute for Supply Management’s manufacturing PMI went up to 54.2 in July, surpassing a Dow Jones estimate of 53.8.
traders also welcomed an earnings season in which some companies are beating estimates at a record rate. Data compiled by FactSet showed that, through Friday, 84% of S&P 500 companies have beaten earnings estimates. If the beat rate stays at that level, it will be the highest since FactSet started tracking the metric in 2008.
The major averages were coming off their fourth consecutive monthly gain in July, with the S&P 500 rising 5.5% and the Nasdaq jumping more than 6% in that time period. The Dow gained 2.4% last month.
Dennis DeBusschere, market strategist at Evercore ISI said investor attention has also turned to Washington as COVID-19 stimulus negotiations continue.
“Increased unemployment claims and decreasing consumer confidence show some deterioration of the U.S. consumer backdrop. If an agreement to extend unemployment support passes soon, the nascent Cyclical/risk-on rally from earlier in July can continue. Until then, risk-on factors will face headwinds despite the sharp decline in COVID net hospitalizations.”
Still Fighting on Rescue Package
Republican and Democratic lawmakers remain at a standstill over some components of the next coronavirus relief legislation. Swift, bipartisan agreement on a new coronavirus stimulus package seems unlikely as House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin dug in on their opposing positions on Sunday.
Democratic leaders and the White House held a round of productive meetings but reported that they remain far apart on an agreement. Pelosi and Mnuchin, along with Senate Minority Leader Chuck Schumer and White House chief of staff Mark Meadows, said they expect to meet Monday to resume discussions. Investors are also monitoring a situation regarding the July jobs report, which the Labor Department is expected to release on Friday.
The once-a-month jobs update will be one of the most crucial this month, especially since the number of people filing for unemployment benefits has been edging higher. As per the Refinitiv, approximately 1.36 million new jobs are expected, well under the 4.8 million added in June, and the unemployment rate is expected to go down to 10.7% from 11.1%.
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