Tags: s&p 500 | record | level | best | august | 36 years

Nasdaq Rallies While S&P 500 Registers Biggest August Gain Since 1986

Nasdaq Rallies While S&P 500 Registers Biggest August Gain Since 1986

Monday, 31 August 2020 04:09 PM

While the S&P boasted its steepest August percentage gain in more than three decades it ended Monday slightly lower and the Dow also lost ground as investors took a pause although the Nasdaq closed higher thanks to high-flying stocks including Apple Inc.

The Federal Reserve's commitment to tolerate inflation and keep interest rates low, positive developments in vaccines and treatments for COVID-19 and a rally in tech-focused stocks have helped the S&P 500 and Nasdaq hit record highs in August.

But while states such as New Jersey continued to ease restrictions on Monday, investors noted that across the United States, total coronavirus cases topped 6 million on Sunday as many states in the Midwest reported increasing infections, according to a Reuters tally.

"It's a momentum trade. People are flooding to the technology companies they think will do well regardless of the pandemic," said Chris Zaccarelli, chief investment officer, Independent Advisor Alliance.

"The U.S. just passed 6 million cases, a further reminder that the pandemic is here to stay until we do something about it. Clearly it has an impact on all businesses but some are more pandemic resistant," he said.

The Dow Jones Industrial Average fell 223.82 points, or 0.78%, to close at 28,430.05, the S&P 500 lost 7.7 points, or 0.22%, to 3,500.31 and the Nasdaq Composite added 79.82 points, or 0.68%, to 11,775.46.

Technology, then healthcare and utilities stocks were the biggest percentage gainers among the 11 major S&P sectors while energy was the biggest percentage decliner.

With the S&P reaching 3.8% above its pre-crisis record during the session, Mona Mahajan, senior U.S. investment strategist at Allianz Global Investors in New York, said investors were showing some caution by favoring technology as they looked warily at U.S. and overseas COVID-19 numbers.

"After such a strong summer run we're reverting back to the old pandemic playbook so we see tech outperforming," she said. "Really that's a defensive move as people think about stay-at-home more as we're heading toward that fall season."

The Nasdaq, meanwhile, ended the day almost 20% above its pre-crisis record closing high. Its top two boosts for Monday were from Apple Inc and Tesla Inc after their stock splits.

While the splits did not provide a fundamental reason to buy the stocks, Mahajan noted that the lower prices may be making the momentum stocks more attractive to some retail investors.

For the month the S&P showed a gain of 7.01%, its biggest advance for August since 1986 when it rose 7.1% that month.

The three main indexes showed their fifth straight monthly rise following March lows, even as economic data pointed to an uneven recovery from the steep downturn.

For the S&P, this was its longest winning steak on a monthly basis since a six-month run from April to September 2018.

And the benchmark's 35.6% gain since April marked the strongest five-month run for the S&P since 1938, according to data from Bespoke Investment Group.

Apple ended the day 3.4% higher at $129.04 while Tesla closed up 12.6% at $498.32.

Aimmune Therapeutics Inc's shares soared 171.6% after Swiss food group Nestle SA offered to pay $2 billion for full ownership of the peanut allergy treatment maker.

Shares of Microsoft Corp, Walmart Inc and Oracle Corp - all suitors for TikTok's U.S. assets - fell as China's new rules around tech exports meant a deal with TikTok owner ByteDance could need Beijing's approval.

Declining issues outnumbered advancing ones on the NYSE by a 2.02-to-1 ratio; on Nasdaq, a 1.64-to-1 ratio favored decliners.

The S&P 500 posted 32 new 52-week highs and no new lows; the Nasdaq Composite recorded 86 new highs and 24 new lows.

On U.S. exchanges 9.4 billion shares changed hands on Monday compared with the average of 9.18 billion for the last 20 sessions. 

GLOBAL STOCKS

A gauge of global stocks pulled back from a record high on Monday but locked in a fifth straight month of gains while the dollar remained weak as investors adjust to the policy shift outlined by Federal Reserve Chair Jerome Powell last week.

U.S. stocks were mostly lower, with the Dow Industrials and the S&P 500 in the red, while the Nasdaq rose solidly. The S&P gained more than 7% for the month to notch its best August since 1986 in what is traditionally a softer month for stock performance.

The Nasdaq fared even better than the S&P for the month, up nearly 10% as it rallied for a fifth straight month.

"After such a strong summer run we're reverting back to the old pandemic playbook, so we see tech outperforming," said Mona Mahajan, senior U.S. investment strategist at Allianz Global Investors in New York. "Really, that's a defensive move as people think about stay-at-home more as we're heading toward that fall season."

Fed Vice Chair Richard Clarida on Monday expanded on Powell's comments from last week, saying that with the U.S. central bank's new policy view, a low rate of unemployment does not on its own trigger higher interest rates. Last week, the Fed said its new strategy plan is to use higher inflation when the economy is robust to offset the impact of periods of weaker prices.

Monday marked the day first trading day for the revamped Dow, with Salesforce.com, Amgen Inc and Honeywell International Inc joining the 30-component index, replacing Exxon Mobil Corp, Pfizer Inc and Raytheon Technologies Corp. Honeywell ended the session lower while a move higher late in the day pushed Salesforce and Amgen to the plus side.

The Dow Jones Industrial Average fell 227.7 points, or 0.79%, to 28,426.17, the S&P 500 lost 8.04 points, or 0.23%, to 3,499.97, and the Nasdaq Composite added 79.82 points, or 0.68%, to 11,775.46.

The dollar edged lower against a basket of major currencies on the day and suffered a fourth straight monthly decline.

In Europe, stocks closed lower on the day as financial shares were weighed down by soft inflation data in Germany and Italy, but managed to close higher for the month. Trading in London was closed for a public holiday.

MSCI's world equity index rose 5.9% in August for a fifth straight month of gains as massive monetary and fiscal stimulus outweighs concern about the outlook for a world economy battered by the coronavirus. The index hit a record of 587.77 on Monday before reversing course on the day.

The pan-European STOXX 600 index lost 0.62% and MSCI's gauge of stocks across the globe shed 0.30%.

The expectations for the Fed to keep interest rates lower for an extended period again kept the dollar in check, with a fourth straight month of declines, marking its longest loss streak since 2017. The greenback, as measured against a basket of six other major currencies, hit a low of 91.989, its lowest level since May 1, 2018.

The dollar index fell 0.075%, with the euro up 0.29% to $1.1938.

Benchmark 10-year notes last rose 6/32 in price to yield 0.7113%, from 0.729% late on Friday.

Oil prices gave up earlier gains. Brent crude oil dipped from a five-month high, as global demand struggled to regain levels prior to the coronavirus pandemic.

U.S. crude settled down 0.84% at $42.61 per barrel and Brent was at $45.28, down 1.16% on the day.

© 2021 Thomson/Reuters. All rights reserved.


StreetTalk
While the S&P boasted its steepest August percentage gain in more than three decades it ended Monday slightly lower and the Dow also lost ground as investors took a pause although the Nasdaq closed higher thanks to high-flying stocks including Apple Inc.
s&p 500, record, level, best, august, 36 years
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2020-09-31
Monday, 31 August 2020 04:09 PM
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