The S&P 500 ticked higher Monday, extending a gradual
August rally that has pushed the benchmark to the cusp of a new high.
The stock market has staged an extraordinary recovery from
its March lows, driven by emergency stimulus efforts from Washington, a surge
in big tech stocks and a torrent of individual investors piling into stocks.
Still, the pace of the advance has slowed in recent weeks as
investors take stock of hurdles facing the economic recovery, stalled
negotiations over a new stimulus package in Washington and tensions with China.
“We had this vibe that the bottom of the economic slump
wasn’t quite as bad as people’s baseline forecast,” said Lyn Graham-Taylor, senior
rates strategist at Rabobank. “But there’s also a feeling right now that the
recovery is not going to be a quick ‘V’ shape. It’s going to be slower.”
The S&P 500 rose 9.14 points, or 0.3%, to close at
3381.99—just a few points below its record closing high from February, before
the coronavirus pandemic ravaged financial markets. In recent days, the
broad-based index has repeatedly approached the record but stopped short of
notching a new close.
The Dow Jones Industrial Average fell 86.11 points, or 0.3%,
to 27844.91. The technology-heavy Nasdaq Composite gained 110.42 points, or 1%,
to a record 11129.73.
Exceptionally thin holiday trading has also contributed to
listless moves in stocks and bond yields, Mr. Graham-Taylor added. “It will get
busy in a few weeks or so,” he added, citing the U.S. presidential election as
one factor that will drive markets during the fall.
Trading volume in New York Stock Exchange-listed stocks rose
to 3.52 billion shares Monday, around one-third lower than the average level so
far this year, according to Dow Jones Market Data. That was up slightly from
Friday’s 3.24 billion shares, the lowest number since New Year’s Eve last year.
The S&P 500’s record closing level of 3386.15 from Feb.
19 has acted as a ceiling on the market in recent trading sessions, but it is
only a matter of time before that record is broken, said Michael Mullaney,
director of global markets research at Boston Partners.
“Many people have been caught off guard by the strength of
this market, and they’re still trying to play catch up,” Mr. Mullaney said.
“There is still tons of cash on the sidelines waiting to go somewhere.”
Consumer-discretionary, real estate and technology stocks
were the best-performing sectors in the S&P 500 on Monday.
Novavax shares rose $9.02, or 6.2%, to $155.53 after the
biotech company said its experimental Covid-19 vaccine is starting the second
phase of testing.
Shares of Tesla surged $184.93, or 11%, to a record close of
$1835.64 after analysts at Wedbush Securities raised their price target for the
electric-car maker. Tesla shares have more than quadrupled in value this year,
making them one of the market’s biggest success stories in 2020.
Financial and energy stocks, which helped power the S&P
500’s rally in recent weeks, were the worst-performing sectors on Monday.
Wells Fargo shares dropped 83 cents, or 3.3%, to $24.47
after Warren Buffett’s Berkshire Hathaway disclosed on Friday that it was
reducing its holdings in the bank.
Bond markets were quiet. The yield on 10-year Treasury notes
ticked down to 0.683%, from 0.708% Friday.
In overseas stock markets, the pan-continental Stoxx Europe
600 edged up 0.3% as an advance in shares of basic-resource companies balanced
a decline in travel and banking stocks.
Shares in Asia were broadly higher. The Shanghai Composite
Index advanced 2.3% after the People’s Bank of China injected 700 billion yuan
($101 billion) into the banking system via its medium-term lending facility.
The move could pave the way for lower benchmark lending rates.
But Japan’s Nikkei 225 fell 0.8% after data showed the
Japanese economy endured its worst contraction on record in the second quarter.
Gross domestic product fell 7.8% in the three months through June compared with
the previous quarter, the biggest decline since at least 1980.
Futures on Brent crude, the global oil benchmark, climbed
1.3% to settle at $45.37 a barrel. Later this week, ministers from the
Organization of the Petroleum Exporting Countries and its allies are set to
review compliance with production cuts.
Write to Joe Wallace at Joe.Wallace@wsj.com
and Alexander Osipovich at alexander.osipovich@dowjones.com.
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