Stocks rose Monday, as big tech lead the way, while other sectors initially joined the rally before falling at the market open. Positive Chinese economic data was the initial booster to some cyclical sectors.
The S&P 500 rose 0.5%, aided by the tech components on the Nasdaq, which rose more than 1%. The 10-year treasury yield rose a to 0.57% from 0.55%. Yields rise when prices fall. The yield has been heavily pressured of late, even as stocks have held in nicely in the past month, as investors grow wary of the speed of the current economic recovery.
The FAANG group mostly rose more than 1%. Friday, those stocks soared after strong earnings reports, making investors fully comfortable again in paying a premium to own these stocks. Microsoft (MSFT) - Get Report rose 3% to $211 a share on rumors that the company might buy controversial Chinese social media company TikTok. Some analysts say TikTok is worth about $50 billion, compared to Microsoft’s over $1 trillion market cap.
Other sectors rose fell, after having risen in premarket trading, as part of a somewhat risk-on day. Large cap oil rose about 0.2% before falling 0.5%. Banking stocks rose before falling less than 1%. Large cap industrials first drifted higher, then fell just 0.2%. Materials fell 0.5%.
China’s manufacturing index came in at a reading for July of 52.8, beating expectations of 52.3, suggesting the strength in China’s mostly V-shaped recovery is intact. This is a positive read for many American manufacturers with supply chains linked to China and points to a strong market in China for American companies with sales exposure in the country.
Pressuring sentiment is a slowing economic recovery in the U.S., which is beginning to show up in forward-looking data. The virus continues to spread at home and the sufficiency and speed of the $1 trillion fiscal stimulus bill in Congress is in question.
U.S. manufacturing data hits the wires Monday as well. This week will be another important one for earnings.
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