Tech sector drives U.S. markets higher after best four months in a decade

Tech sector drives U.S. markets higher after best four months in a decade

TORONTO — The continuing strength of the tech sector powered U.S. stock markets higher in the start of trading in August after they concluded the best four months in a decade.

The S&P 500 reached its loftiest level since February while the Nasdaq composite set another all-time record.

In New York, the Dow Jones industrial average closed up 236.08 points at 26,664.40. The S&P 500 index gained 23.49 points to reach 3,294.61 after hitting an intraday high of 3,302.73. Nasdaq rose 157.52 points to 10,902.80 after reaching a record 10.927.56 in earlier trading.

The three factors driving the markets on Monday were momentum in technology after last week’s blowout earnings, a further rise in manufacturing activity in the U.S. and Europe and hopes that U.S. lawmakers will agree to another round of fiscal relief.

Economic data has consistently surprised to the upside, but it’s going to be increasingly difficult to beat expectations this month, said Angelo Kourkafas, investment strategy analyst at Edward Jones.

“I think it’s going to be a little more of a bumpy ride than we’ve experienced in the last four (months),” he said in an interview.

The Toronto Stock Exchange was closed for a provincial holiday.

Microsoft and Apple, which together account for about 12.5 per cent of the S&P500, saw their shares gain. Microsoft started the week up 5.6 per cent after confirming it was in talks to buy social video app TikTok in the U.S. after U.S. President Donald Trump threatened to ban the China-based app over security concerns.

Apple was up 2.5 per cent on the day while other names also did well after beating earnings expectations last week. Amazon earnings rose 77 per cent, Apple was up three per cent, Microsoft nine per cent and Facebook seven per cent. Only Google declined.

About 85 per cent of companies on the S&P 500 have beat expectations, the highest rate for a second quarter since 1992.

“You can clearly see who is winning in this environment,” Kourkafas said.

As a whole, companies in the index saw earnings decline 40 per cent, compared with the 44 per cent decline forecast by analysts, he said.

“So the negative 40 per cent, even though it’s a horrible number, it’s better than expectations.”

The Canadian dollar traded for 74.72 US compared with 74.60 on Friday.

The September crude contract was up 74 cents at US$41.01 per barrel and the September natural gas contract was 30.2 cents at US$2.10 per mmBTU.

The December gold contract, which had the highest trading volume, was up 40 cents at US$1,986.30 an ounce after peaking at a record US$2,009.50. The September copper contract was up 4.4 cents at nearly US$2.91 a pound.

This report by The Canadian Press was first published Aug. 3, 2020.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

Ross Marowits, The Canadian Press

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