Major U.S. stock indexes finished higher Monday, as investors watched lawmakers haggle over a coronavirus rescue program and braced for the busiest week of earnings season.
How did major benchmark perform?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.26% closed 114.88 points higher, or 0.4%, at 26,584.77, while the S&P 500 /zigman2/quotes/210599714/realtime SPX -0.25% rose 23.78 points, or 0.7%, to finish at 3,239.41. The tech-heavy Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -0.06% led the market’s gains on Monday, ending 173.09 points higher, or 1.7%, at 10,536.27.
Major benchmarks ended modestly lower Friday, leaving the Dow with a weekly loss of 0.8%, while the S&P 500 declined 0.3% for the week. The Nasdaq lost 1.3% in a week that saw previously high-flying tech shares suffer the brunt of selling pressure.
What drove the market?
Investors were buying technology stocks Monday, while keeping an eye on progress in Washington on a second major U.S. spending plan, a raft of geopolitical concerns and the march higher in U.S. COVID-19 cases and deaths.
“It’s a tech day,” said Donald Townswick, director of equity strategies at Conning, in an interview, adding that he expects high-flying technology stocks to stay aloft and “continue to dominate for the reasons they have,” including their ability to provide top-line growth, while most other companies haven’t during the pandemic.
Senate Republicans also were expected on Monday to unveil their plans to provide additional coronavirus aid, following disagreements between themselves and the White House on the proposal, news reports said .
However, Republican plans to tackle the legislation in a piecemeal approach remain stiffly opposed by Democrats. The talks come as a provision that provides an additional $600 a week in unemployment benefits to more than 32 million out-of-work Americans expires at the end of the month.
“There is a very strong case to be made for additional fiscal stimulus. Both sides of the political aisle want to get something down,” said Talley Leger, senior investment strategist for Invesco, in an interview.
He noted high-frequency data-tracking movements of Americans’ shopping habits and dining reservations had stalled in several states, suggesting the recovery in U.S. economic activity during the pandemic was at risk of coming apart.
U.S.-China tensions simmered, as the U.S. closed its consulate in the western Chinese city of Chengdu at Beijing’s demand, in retaliation for Washington ordering the closure of China’s Houston consulate.
Earnings season continues apace this week, including results from a host of tech heavyweights. Google parent Alphabet Inc . /zigman2/quotes/205453964/composite GOOG +0.07% /zigman2/quotes/202490156/composite GOOGL +0.16% , Amazon.com /zigman2/quotes/210331248/composite AMZN -0.50% , Apple Inc. /zigman2/quotes/202934861/composite AAPL -0.56% and Facebook Inc . /zigman2/quotes/205064656/composite FB +1.22% are due to report Wednesday and Thursday.
“Markets are fairly quiet today, while continuing their upward momentum earlier this month,” said Charlie Ripley, senior investment strategist for Allianz Investment Management in Minneapolis, in an interview. But he also sees “a tremendous amount of uncertainty in the market,” including around “high expectations” around tech earnings.
Chief executives from all four companies will appear in congressional hearings on Wednesday to answer questions about their business practices.
Through the end of last week, companies representing 30.5% of the S&P 500’s market value had reported second-quarter results, with earnings beating expectations by 13.7% in aggregate, with 79% of companies beating lowered estimates, said Jonathan Golub, chief U.S. equity strategist at Credit Suisse, in a note.