NEW YORK — Wall Street’s three major indexes closed higher on Monday with the biggest gains in technology stocks as investors focused on the potential for more government stimulus measures even as they worried about an increase in coronavirus cases in the United States and other countries.
The World Health Organization reported a record rise in global coronavirus cases on Sunday, driving demand for perceived safe havens including gold and longer-term U.S. Treasuries.
While New York City on Monday celebrated the lifting of many coronavirus restrictions, a dozen states in the U.S. South and Southwest reported record increases in new cases with 10 per cent to 20 per cent of people testing positive in some.
However White House economic adviser Larry Kudlow told CNBC earlier in the day that there was no second wave of the pandemic and that it is unlikely there will be widespread shutdowns across the country.
Investors were also clinging to hopes for more government stimulus after U.S. House of Representatives Democrats on Thursday unveiled a $1.5 trillion infrastructure bill in the same week that reports emerged of preparations by the Trump administration for a infrastructure stimulus plan.
“The good news from last week is dominating the bad news from today, which is the increase in COVID cases,” said Nela Richardson, investment strategist at Edward Jones, who cautioned that government infrastructure spending plans have failed to become reality several times in the recent past.
Richardson said rising virus case numbers spurred a rotation out of sectors hit hardest by coronavirus’ economic impacts into more resilient sectors such as technology.
The S&P/TSX composite index closed up 42.70 points at 15,516.90.
n New York, the Dow Jones industrial average was up 153.50 points at 26,024.96. The S&P 500 index was up 20.12 points at 3,117.86, while the Nasdaq composite was up 110.35 points to a record high close of 10,056.47.
Investors were also looking past the current quarter and into 2021, when earnings are expected to start improving according to Sam Stovall, chief investment strategist at CFRA.
Analysts expect a 42.7 per cent drop in earnings per share for the second quarter, according to estimates gathered by Refinitiv.
Of the S&P’s 11 major sectors, technology was leading the pack. However the next biggest gainer was the defensive utilities sector.
The market took a step back on Friday after Apple Inc’s move to temporarily shut some U.S. stores again underscored concerns of a delay in the recovery.
But Apple shares were climbing on Monday and trading at record highs as the company announced new products at its annual conference for software developers.
Travel-related stocks were some of the weakest as those companies have been hit hard in the past by the virus lockdowns.
The S&P 1500 airlines index dropped, while shares of cruise operators Norwegian Cruise Line and Royal Caribbean Cruises.
U.S.-based meat processor Tyson Inc slipped as China’s customs authority suspended imports of poultry products from a plant owned by the company that had been hit by the coronavirus.
American Airlines Group Inc fell as it planned to secure US$3.5 billion in new financing by selling shares and convertible senior notes to boost liquidity.
Virgin Galactic Holdings Inc soared as it signed up with NASA to develop a program to promote private missions to the International Space Station.
© Thomson Reuters 2020