Stocks extend historic rally as Big Tech rebounds
Stocks extended gains after closing at a record for the first time since the pandemic started amid a rebound in giant technology companies. Treasuries advanced.
The S&P 500 rose as investors assessed earnings from retailers and the latest on stimulus talks ahead of the Federal Reserve's meeting minutes. Apple reached a $2 trillion market valuation for the first time after an almost 60% surge this year. Target rallied as revenue trounced analysts' projections, brushing off concerns that demand would ebb after consumers spent their relief checks. Lowe's gained on a strong summer sales pace that beat estimates. Momenta Pharmaceuticals soared as Johnson & Johnson agreed to acquire the company for about $6.5 billion.
A buying stampede drove American stocks up more than 50% from this year's lows, with the S&P 500 completing its fastest-ever return to a record after a plunge of at least 20%. A drop in New York City's positive Covid-19 test rate to the lowest since the pandemic began and signs the outbreak is easing in Sunbelt states also bolstered optimism. Meanwhile, high-frequency economic indicators and corporate earnings have improved amid ultra-easy monetary policy and massive stimulus measures.
"The Fed's largesse means that there are trillions of dollars of excess liquidity sloshing around seeking greater returns than the near zero or even negative rates offered by fixed income," wrote Win Thin, global head of currency strategy at Brown Brothers Harriman & Co. in New York. "Much of that is going into equities."
Democratic and Republican leaders are hinting that they are looking for a path toward reviving stalled negotiations on the next round of pandemic relief for the U.S. economy, even as both sides remain far from any deal. The Trump administration sees a possibility for both partis to agree on a smaller round of pandemic relief totaling $500 billion that would omit the biggest areas of disagreement, a senior U.S. official said on Tuesday night.
"The wall of cash really buoying the risk appetite of investors has successfully lifted the market past where it was prior to the outbreak of Covid," Todd Jablonski, chief investment officer at Principal Global Asset Allocation. "That's a testament to what you've seen in terms of policy response, but it by no means means that we're in the clear."
Boosted by the S&P 500's surge to a record on Tuesday, the market cap of global equities is at an all-time high of $89.7 trillion. Risk assets have rallied since March as unprecedented stimulus measures and gains in technology stocks have outweighed concerns about U.S.-China trade tensions and rising coronavirus cases.
Stocks:
- The S&P 500 rose 0.2% as of 11:24 a.m. New York time.
- The Stoxx Europe 600 Index advanced 0.4%.
- The MSCI Asia Pacific Index was little changed.
Currencies:
- The Bloomberg Dollar Spot Index decreased 0.1%.
- The euro increased 0.1% to $1.1944.
- The Japanese yen was little changed at 105.42 per dollar.
Bonds:
- The yield on 10-year Treasuries dipped one basis point to 0.65%.
- Germany's 10-year yield decreased one basis point to -0.47%.
- Britain's 10-year yield fell less than one basis point to 0.217%.
Commodities:
- The Bloomberg Commodity Index was little changed.
- West Texas Intermediate crude dipped 0.6% to $42.63 a barrel.
- Gold weakened 0.6% to $1,991.38 an ounce.
