Merger Talks Extend Tech Rally

Here is a daily recap of the S&P 500 broken down by sector followed by sector heat map as merger talks extend tech rally. Stocks in heat map are based on the top 10 holdings of each sector ETF. Click on each picture to zoom in. Below is a summary of today’s action on Wall Street provided by CNBC:

U.S. stock futures rise as earnings season, stimulus talks continue

Futures contracts tied to the major U.S. stock indexes rose at the start of the overnight session Sunday evening as investors turned their attention back to Washington and the economy after a busy week of corporate earnings. Dow Jones Industrial Average futures rose 30 points at the start of the overnight session, implying a slight gain when regular trading resumes on Thursday.

The S&P 500 (SPY) rose +0.72% today. Sector advancers led decliners 6 to 5 as shown below in the sector graph. Gains ranged from +2.46% to less than 1%. Losses ranged from -1.54% to less than 1%, check the sector graph for specifics.

The Dow Jones index added +236 points (+0.89%) to close at 26,664. The Nasdaq jumped +157 points (+1.47%) to settle at 10,902.

Merger Talks Extend Tech Rally

The tech sector once again led the market higher Monday as merger talks between Microsoft and social media company TikTok had investors hitting the buy button.

Shares of major tech companies led the way higher for the broader market. Microsoft gained more than 5% after confirming reports about being in talks to buy social video app TikTok in the U.S. The talks come even as President Donald Trump threatens to ban TikTok because of security concerns over its parent company’s ties to China. Apple and Netflix rose 2.9% and 2.4%, respectively.

Some of the other factors driving the market higher included:

  • Eli Lilly announcing the start of a phase 3 trial of LY-CoV555, an experimental coronavirus antibody treatment that may prevent the virus from spreading among U.S. nursing home staffers and residents. The stock gained 1.7%.
  • Stocks got a boost from better-than-expected manufacturing data. The Institute for Supply Management’s manufacturing PMI rose to 54.2 in July, topping a Dow Jones estimate of 53.8.
  • Investors also cheered an earnings season in which companies are beating estimates at a record rate. Data compiled by FactSet showed that, through Friday, 84% of S&P 500 companies have beaten earnings expectations. If beat rate stays at that level, it will be the highest since FactSet started tracking the metric in 2008.

The major averages were coming off their fourth consecutive monthly gain in July, with the S&P 500 rising 5.5% and the Nasdaq jumping more than 6% in that time period. The Dow gained 2.4% last month.

Stimulus Relief Update

Republican and Democratic lawmakers remain at a standstill over some components of the next coronavirus relief legislation. 

The key debate that separates the two parties is the federal boost to unemployment assistance, which was set at $600 per week in March but recently expired. While the White House has come out in favor of reducing the federal assistance to $200 a week, Democrats have called for keeping it at the $600 level.

Other provisions, such as another round of $1,200 stimulus checks, have broader support from both political parties.

Key Takeaway…

Notable S&P 500 Movers…

Below I’ve highlighted some notable S&P 500 movers (both winners & losers).

Credit: Sector Graph provided by Sector SPDR app. Sector breakdown provided by Charles Schwab. Sector heat map provided by finviz. Information Credit: News Headlines and quotes were taken from CNBC in the writing of this post.

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8/3/20

S&P 500 Sector Graph

Merger Talks Extend Tech Rally

S&P 500 (SPY)

Merger Talks Extend Tech Rally

Communication Services (XLC)

Merger Talks Extend Tech Rally

Consumer Discretionary (XLY)

Merger Talks Extend Tech Rally

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Consumer Staples (XLP)

Merger Talks Extend Tech Rally

Energy (XLE)

Merger Talks Extend Tech Rally

Financials (XLF)

Merger Talks Extend Tech Rally

Real Estate (XLRE)

Healthcare (XLV)

Industrials (XLI)

Materials (XLB)

Technology (XLK)

Merger Talks Extend Tech Rally

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Utilities (XLU)

S&P 500 Sector Heat Map

 

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