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S&P, Nasdaq close at record highs in tech-fueled rally

The S&P 500 and Nasdaq boasted record closing highs on Tuesday with technology leading the charge as Apple and Zoom Video soared while economic data and moves toward stimulus talks in Washington helped fuel optimism.

Tuesday’s rally added to Wall Street’s fifth straight monthly gain and the S&P 500’s strongest August advance in more than three decades, which was also mostly thanks to technology stocks and central bank support.

Apple Inc rose just under 4 per cent on Tuesday, a day after its stock split and after a report said the company had asked suppliers to make at least 75 million 5G iPhones for later this year.

Zoom Video Communications Inc surged 40.8 per cent after the videoconferencing company raised its annual revenue forecast by more than 30 per cent as it converted more of its huge free user base to paid subscriptions. Along with Amazon.com Inc, it provided Nasdaq’s biggest boost for the day.

Investors cited technology momentum as the primary reason for Tuesday’s gains, with some help from data and politics.

Tech companies have benefited from the pandemic-induced work-from-home trends and lower interest rates, said Greg Boutle, U.S. head of equity & derivative strategy at BNP Paribas in New York.

“At the moment the market is seeing a lot of positive momentum,” said Boutle, so “if you get OK-to-good data and anything from the political landscape that looks like it’s moving more toward a compromise, that’s constructive for markets.”

U.S. Treasury Secretary Steven Mnuchin said he would telephone House Speaker Nancy Pelosi about stalled coronavirus aid negotiations later on Tuesday and White House chief of staff Mark Meadows said he expects Senate Republicans to bring up a targeted COVID-19 relief bill next week.

Earlier in the day ISM data showed U.S. factory activity expanded for the third straight month to a reading of 56.0 in August, the highest since November 2018. The figures follow encouraging manufacturing surveys from China and Europe earlier in the day.

However, employment continued to lag, according to ISM data, supporting views that the labor market recovery was losing momentum. Investors will keep a close eye on the monthly U.S. jobs report due on Friday.

The Dow Jones Industrial Average rose 215.61 points, or 0.76 per cent, to close at 28,645.66, the S&P 500 gained 26.34 points, or 0.75 per cent, to 3,526.65 and the Nasdaq Composite added 164.21 points, or 1.39 per cent, to 11,939.67.
The S&P ended the session more than 4 per cent above its pre-crisis record, reached in February, while the Nasdaq finished 21.7 per cent above its February peak in its 42nd closing high for 2020. The blue-chip Dow, meanwhile, was still 3 per cent under its record.

Of the S&P’s 11 major sectors the biggest percentage gainers were materials, information technology and consumer discretionary

But some strategists cautioned there could be more market volatility ahead as U.S. politics will take center stage in the coming weeks. Republican President Donald Trump, who is running for re-election against Democratic presidential nominee Joe Biden, has seen his polling gap with the former vice president narrow recently.

“There’s still a lot of uncertainty mostly around the pandemic but also some uncertainty around the election. The closer we get to that election the more volatility we’ll see in the market,” said Veronica Willis, investment strategy analyst at Wells Fargo Investment Institute in St. Louis. Walmart rose more than 6 per cent after the retailer unveiled the perks of its new loyalty program, Walmart Plus.

Tesla Inc fell 4.7 per cent after the electric-car maker announced plans to raise up to $5 billion through a share sale program a day after its 5-for-1 stock split.

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Source: Cyprus News Agency