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Nasdaq Races to Record High as Big Tech Reigns Supreme

imageStock Markets13 hours ago (Aug 03, 2020 04:03PM ET)

(C) Reuters.

By Yasin Ebrahim – The Nasdaq surged to record highs Monday as big tech continued to drive the broader market higher following bullish earnings last week, while healthcare names rallied on positive coronavirus treatment news.

The Nasdaq Composite jumped 1.47% to close at a record high. The Dow Jones Industrial Average rose 0.90%, or 236 points and the S&P 500 gained 0.69%.

The tech-heavy Nasdaq was powered to all-time highs, led by Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT), with the latter up 5.6% after confirming that it was in talks to buy social media company TikTok from ByteDance.

The potential acquisition has been cheered by analysts on Wall Street, who believe that the addition of TikTok could boost Microsoft’s consumer offering.

“(Satya) Nadella has essentially had the golden touch since becoming CEO… although the missing piece in the puzzle has been a consumer trojan horse strategy which TikTok can fill along with a re-rating/sum-of-the-parts valuation,” Wedbush analyst Daniel Ives said in a note.

Beyond tech, healthcare also supported investor sentiment on stocks thanks to signs of progress in the race for a coronavirus treatment.

Eli Lilly (NYSE:LLY) said it would get a phase 3 trial of its experimental coronavirus treatment, LY-CoV555, underway, sending its shares 1.7% higher.

A lack of progress between U.S. lawmakers over the next coronavirus stimulus package, however, kept broader market gains in check.

Unemployment assistance, set at $600 a week in March, has lapsed, and renewing it has remained a key sticking for lawmakers.

On the earnings front, Clorox (NYSE:CLX) slipped about 1.9% despite delivering quarterly results that beat on the top and bottom lines.

In economic news, signs of a turnaround in manufacturing continued.

ISM manufacturing data for July showed an uptick to 54.2, beating expectations of 53.6. A reading above 50 in the ISM index indicates an expansion in manufacturing, which accounts for about 12% of the U.S. economy.

“We remain confident that manufacturing will be more resilient to Covid-related developments than the service side of the economy, and activity should continue to expand in coming quarters as the recovery takes hold,” Jefferies (NYSE:JEF) said in a note.

Still, the path ahead for the economy is one paved with uncertainty.

“I think the slowdown in July would be consistent with the idea that we shouldn’t expect a completely smooth transition as you go forward because this is a crisis and there’s going to be ups and downs,” St. Louis Federal Reserve President James Bullard said on Monday.

Nasdaq Races to Record High as Big Tech Reigns Supreme

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