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More gains for tech as US stocks head for a 3rd monthly gain

Alex Veiga and Damian J. Troise
Associated Press

Technology companies were high on the leaderboard again Tuesday as Wall Street extended its recent winning streak and headed for its third monthly gain in a row.

The S&P 500 added 0.4% Tuesday. Investors have been focusing on the prospects for an economic recovery as more businesses reopen after being shut down due to the coronavirus pandemic.

Health care stocks and companies that rely on consumer spending were also among the big gainers, while safe-play sectors like real estate and utilities stocks fell. Bond yields rose, a sign of increasing confidence in the prospects for economic growth.

Real estate and utilities stocks fell.

The U.S. flag is draped over the facade of the New York Stock Exchange on Wall Street in this file photo.

Encouraging economic data, including retail sales and hiring, have helped stoke optimism among investors that the reopening of businesses in the U.S. and other countries will pull the economy out of its recession relatively quickly. The market has continued to climb, despite bouts of volatility, even as a rise in new coronvairus cases in the U.S. and other countries clouds the prospects for an economic recovery.

Investors have grown confident that the Federal Reserve and Congress are prepared to continue providing a historic amount of support to the market and economy, said Sam Stovall, chief investment strategist at CFRA.

“All of the negative news has basically been built into share prices,” Stovall said. “If we are to stumble, then the Fed and Congress are likely to step in to put a fiscal and monetary floor underneath the economy and the markets. And now, with the likelihood that the economy will not be shutting down entirely should we end up with a second wave, the market is basically saying it’s ‘onward and upward.’”

The Dow Jones Industrial Average was up 192 points, or 0.7%, to 26,217. The Nasdaq composite, which is heavily weighted with technology stocks, gained 1.1%. The index has only fallen twice so far in June. Small company stocks were also notching solid gains. The Russell 2000 index was up 0.8%.

The yield on the 10-year Treasury note rose to 0.72% from 0.70% late Monday. It tends to move with investors’ expectations for the economy and inflation.

The World Health Organization said over the weekend that the pandemic is still in its ascendancy. The U.S., which is seeing rapid increases in cases across the South and West, has the most infections and deaths by far in the world, with 2.3 million cases and over 120,000 confirmed virus-related deaths, according to a tally by Johns Hopkins University.

The virus remains a concern as businesses reopen, but that seems to be going relatively well and new cases aren’t yet that concerning, said Jason Draho, head of Americas asset allocation at UBS Global Wealth Management.

“Right now, that’s something to monitor, but when you look at the underlying data, it’s all still at levels that are not too concerning as opposed to where we were back in March and April,” he said.

Investors have been placing more weight on economic data releases that suggest economies that have reopened are making strides to emerge from a deep recession.

On Tuesday, the Commerce Department said sales of new U.S. homes jumped 16.6% in May to an annual rate of 676,000, exceeding Wall Street’s forecasts.

Further updates on the U.S. economy are expected toward the end of this week, when the government will issue data on consumer spending, weekly unemployment aid applications and durable goods orders.

European shares advanced after a measure of economic activity in the eurozone, the purchasing managers’ index, rose significantly in June from the month before. The index was just shy of the level that indicates the economy is growing again after a devastating plunge in the spring.

France’s CAC 40 gained 1.4%, while Germany’s DAX rallied 2.1%. Britain’s FTSE 100 rose 1.2%.

Asian markets overcame some early turbulence caused by reported comments by White House trade adviser Peter Navarro suggesting the U.S. trade deal with China was in trouble. President Donald Trump later said the agreement was still on.

Benchmark U.S. crude oil fell 9 cents to settle at $40.37 a barrel. Brent crude, the international standard, dropped 45 cents to close at 0.5% to $42.63 per barrel.