Stocks Rise Amid Rally in Big Tech, Stimulus Talks: Markets Wrap

(Bloomberg) -- U.S. stocks extended their July rally amid a surge in technology shares and on news the White House and Democrats are planning to meet Saturday to discuss the next virus-relief package.

Chief of Staff Mark Meadows said the administration is willing to compromise while House Speaker Nancy Pelosi noted Republicans didn’t have the votes to extend the $600 per week unemployment benefit that’s propped up incomes and spending. The Nasdaq 100 outperformed on solid earnings from giants such as Apple Inc. and Amazon.com Inc. Microsoft Corp. erased declines on a news report it’s exploring an acquisition of TikTok’s operations in the U.S. Earlier Friday, equities slumped as Covid-19 deaths in Florida hit a record for a fourth straight day, cases in Arizona accelerated and the virus transmission rate in New Jersey jumped.

The S&P 500 notched its fourth consecutive monthly advance, but signs the economic rebound is stalling might make it tougher for stocks to gain further momentum. The extra federal unemployment benefits of $600 a week run dry as of Friday -- leaving millions of out-of-work Americans without an additional safety net at a time when the jobs market is still depressed. The U.S. had the outlook on its debt rating revised to negative from stable by Fitch, which cited the ongoing deterioration in public finances and the absence of a credible fiscal consolidation plan.

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“With the impact of past stimulus measures fading and given some evidence that the global recovery has already stalled, it remains to be seen what will help keep global stock markets elevated in the coming months, especially U.S. stocks,” said Fawad Razaqzada, a market analyst at ThinkMarkets. “There is a risk we may see a correction in August, although it doesn’t have to be as severe as the one we saw in March, for things have since improved and monetary conditions are even more accommodative.”

Tech companies continued to lead the advance in 2020, and their solid results are a validation for bulls who have bet the industry would emerge from the pandemic stronger than the rest of the market. Since the bottom in March, the Nasdaq 100 has added about $4 trillion in market value. It beat the benchmark gauge for a 10th straight month -- the longest winning streak in 20 years.

Despite the tech resilience, Michael Sheldon, chief investment officer at RDM Financial Group, said it’s very possible the market could enter a trading range over the next month or two because there’s still a lot of uncertainty.

“If you look ahead 12 to 18 months, the economy is likely to continue to recover from the deep downturn caused by Covid-19,” he said. “However, it’s important for investors to know that the recovery in the economy is not likely to be in a straight line. There will likely be bumps around the way.”

Some other corporate highlights:

• Exxon Mobil Corp. and Chevron Corp. posted the worst losses in a generation after the pandemic and a global crude glut combined to batter almost every part of their businesses.
• Caterpillar Inc.’s cost cuts helped it make up for slowing sales, but concern of second waves of the coronavirus weighed on the prospects for the rest of the year.
• Gilead Sciences Inc.’s “remdesivir guidance is hard to believe,” a Raymond James analyst said after the biotech company raised its forecast.
• Pinterest Inc. said revenue in July jumped as advertisers and users returned to the social-sharing service.

These are some of the main moves in markets:

Stocks

• The S&P 500 rose 0.8% as of 4 p.m. New York time.
• The Stoxx Europe 600 Index decreased 0.9%.
• The MSCI Asia Pacific Index slid 1.5%.

Currencies

• The Bloomberg Dollar Spot Index jumped 0.4%.
• The euro sank 0.6% to $1.1778.
• The Japanese yen depreciated 1.1% to 105.86 per dollar.

Bonds

• The yield on 10-year Treasuries fell one basis point to 0.54%.
• Germany’s 10-year yield rose two basis points to -0.52%.
• Britain’s 10-year yield rose two basis points to 0.104%.

Commodities

• The Bloomberg Commodity Index rose 0.6%.
• West Texas Intermediate crude increased 1.3% to $40.42 a barrel.
• Gold strengthened 0.9% to $1,973.78 an ounce.

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