The Nasdaq surged to a record high close on Monday as a rebound in multibillion-dollar deals, including Microsoft's pursuit of TikTok's U.S. operations, lifted sentiment, and efforts to hammer out a coronavirus relief bill resumed.
Microsoft jumped 5.6% after it said it would push ahead with talks to buy the U.S. operations of Chinese-owned TikTok. President Donald Trump reversed course earlier on a planned ban of the short-video app.
ADT soared over 56% on news that Alphabet's Google was buying a nearly 7% stake in the home security firm for $450 million in a deal that will allow it to provide service to customers of its Nest home security devices.
Varian Medical Systems Inc jumped 22% after a $16 billion buyout by Germany's Siemens Healthineers, while Kansas City Southern gained after a report a group of buyout investors were considering a takeover bid in a deal of about $20 billion.
"The market is revolving around M&A activity possibly picking up," said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma. "It means CEOs are more confident about the future. Otherwise, why would they lay out billions of dollars?"
Apple Inc climbed 2.5%, expanding its rally following stunning quarterly results and announcing a four-for-one stock split. The tech giant is about $140 billion short of hitting $2 trillion in market capitalization.
The S&P 500 information technology index jumped 2.5%, far outpacing other sector indexes.
Congressional Democrats and Trump administration officials resumed talks aimed at hammering out a coronavirus relief bill after missing a vital deadline to extend relief benefits to tens of millions of jobless Americans.
A rally in tech-related stocks and trillions of dollars in monetary and fiscal stimulus have lifted the S&P 500 to within about 3% of February's record high.
The Labor Department's monthly employment report is due on Friday, on the heels of last week's weekly jobless claims data that showed a recovery in the job market appeared to have stalled in late July.
The Dow Jones Industrial Average rose 0.89% to end at 26,664.4 points, while the S&P 500 gained 0.72% to 3,294.61.
The Nasdaq Composite climbed 1.47% to 10,902.80, beating its previous record high close on July 20.
With the U.S. corporate earnings season now past its half-way mark, a record number of companies have beaten dramatically lowered estimates, but the second quarter is still set to be the low point for earnings this year.
Drug distributor McKesson Corp jumped 6.5% after boosting its full-year earnings forecast.
Advancing issues outnumbered declining ones on the NYSE by a 1.94-to-1 ratio; on Nasdaq, a 2.47-to-1 ratio favored advancers.
The S&P 500 posted 41 new 52-week highs and no new lows; the Nasdaq Composite recorded 164 new highs and 16 new lows.
About 9.8 billion shares changed hands in U.S. exchanges, compared with the 10.5 billion daily average over the last 20 sessions.
The dollar rose and equity markets rallied on Monday as investors welcomed upbeat manufacturing data from around the world and as Microsoft's pursuit of TikTok's U.S. operations and other deals bolstered sentiment.
Gold prices retreated from a record high after some profit-taking and the dollar's strengthening, though concerns about the coronavirus' toll on the economy limited bullion's losses.
Oil prices rose as manufacturing data from the United States, Europe and China offset oversupply fears fueled by the prospect of the Organization of the Petroleum Exporting Countries and its allies winding back output cuts.
MSCI's benchmark for global equity markets rose 0.79% to 556.26. Europe's broad FTSEurofirst 300 index closed up 2.1% at 1,413.87, lifted by a reading of IHS Markit's final Manufacturing Purchasing Managers' Index (PMI) for the euro zone.
The index bounced to 51.8 in July, its first time above the 50 mark separating growth from contraction since January 2019.
Manufacturing activity in China expanded at the fastest pace in nearly a decade as domestic demand improved, China's Caixin/Markit PMI showed, suggesting the world's second-largest economy would help cushion the pandemic's blow to world growth.
In the United States, manufacturing activity accelerated to its highest level in nearly 1-1/2 years in July as orders increased despite a resurgence in new COVID-19 infections, the Institute for Supply Management said.
"There's good feelings in the stock market. You're seeing that with earnings and you're seeing that with some of the PMI numbers," said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey. "People were really expecting the worse. Things are bad, but not as bad as predicted."
Wall Street's advance was driven by Microsoft, whose shares rose 5.6% after it formally declared interest in TikTok's U.S. operations on Sunday, Meckler said.
ADT surged 57% on news that Alphabet's Google was buying a nearly 7% stake in the home security firm for $450 million in a deal that will allow it to provide service to customers of its Nest home security devices.
"Investors are going with what's worked for them and they've decided technology has survived what they see as the worst of the pandemic," Meckler said.
The dollar rose against a basket of currencies as investors unwound some recent short positions after the currency posted its weakest monthly performance in a decade in July. Gains were slowly pared as the day progressed.
Speculators' net shorts on the dollar are at their highest since August 2011 at $24.27 billion, Reuters calculations and U.S. Commodity Futures Trading Commission data show.
The dollar index rose 0.111%, with the euro down 0.1% to $1.1762. The Japanese yen weakened 0.04% versus the greenback at 105.94 per dollar.
Oil rose. Brent crude futures settled up 63 cents at $44.15 an ounce. U.S. crude futures rose 74 cents to settle at $41.01 a barrel.
Gold closed little changed, but was poised to break through the $2,000-an-ounce mark.
U.S. gold futures settled mostly unchanged at $1,986.30 an ounce.
Further dollar gains were likely to be capped by the slowing U.S. recovery and real rates breaking below -1% for the first time.
The real rate hit a record low amid a marked flattening of the yield curve as investors wager on more accommodation from the Federal Reserve.
Benchmark 10-year Treasury yields rose 1.7 basis points to 0.527% after touching the lowest level since March last week.
German government bond yields fell slightly to -0.525%.
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