U.S. stocks rose Tuesday as shares of big technology stocks
recouped some of their recent losses.
Investors have so far this month endured volatile trading
sessions as the previously highflying tech stocks suddenly pulled back. But
such shares appear to have stabilized in recent days.
“We’re back to the place we were right before Labor Day
weekend,” said Ernesto Ramos, head of equities at BMO Global Asset Management.
“The market action is very, very much led by tech stocks, and growth stocks in
The S&P 500 added 17.66 points, or 0.5%, to 3401.20. The
tech-heavy Nasdaq Composite climbed 133.67 points, or 1.2%, to 11190.32. The
Dow Jones Industrial Average inched up 2.27 points, or less than 0.1%, to
The advance by tech shares extended a rally that started
late last week and boosted the broad stock indexes. Salesforce.com shares rose
$5.04, or 2%, to $251.68, and Microsoft added $3.37, or 1.6%, to $208.78.
Looking ahead, investors face uncertainty about the spread
of the coronavirus, efforts to produce a vaccine, the pace of economic recovery
and the outcome of the coming U.S. elections. But some investors believe stocks
still have room to rise.
“Right now, it looks to us like the economy’s going to be
improving. They’re keeping interest rates low. And so it’s still a favorable
environment for stocks, especially growth companies,” said Tom Plumb, president
and portfolio manager at Plumb Funds.
A wave of multibillion-dollar deals emerging earlier this
week from well-known tech companies have helped boost stock benchmarks,
underscoring the outsize role of giant firms in U.S. equity markets. Nvidia
shares rose $4.75, or 0.9%, to $519.64 Tuesday following news in recent days
that the chip maker would acquire chip-designer Arm Holdings from SoftBank.
“There’s been exuberance in the tech sector and valuations
are high, but M&A means some people think there’s still some assets that
aren’t overvalued, they may actually be undervalued,” said Ludovic Subran,
chief economist at Allianz. “M&A can be perceived as a sign of
undervaluation” and some people will be buying.
Among other individual stocks, shares of NextEra Energy rose
$13.78, or 4.9%, to $295.70 after the utility raised its outlook for next year
and announced a stock split. Tesla shares jumped $30.14, or 7.2%, to $449.76,
continuing to recover losses from earlier in the month.
Data Tuesday showed U.S. industrial production rose in
August but at a lower rate than earlier in the summer, indicating the recovery
in manufacturing is slowing.
Earlier Tuesday, key economic statistics showed that China’s
economic recovery accelerated in August. Retail sales in the Asian nation
returned to pre-coronavirus levels with their first month of growth this year.
Other major indicators, including factory production, investment and property
activity, all gathered pace, signaling a strong rebound for the world’s
“It paints a fairly robust picture of the Chinese economy,”
said Sebastien Galy, a macro strategist at Nordea Asset Management. “It’s a
solid positive surprise, but the data tells you more about the message the
Chinese government wants to give you.”
Overseas, the Shanghai Composite Index closed up 0.5%, and
Hong Kong’s Hang Seng Index rose 0.4%. The pan-continental Stoxx Europe 600
rose 0.7% from an anticipated boost in Chinese demand for European goods.
The yield on 10-year U.S. Treasury bonds ticked up to
0.678%, from 0.669% on Monday.
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