A child wearing a face mask sits on the Charging Bull statue, also known as the Wall Street Bull, following the outbreak of the coronavirus disease (COVID-19) in New York, August 19, 2020.
Carlo Allegri | Reuters
Stocks rose on Monday, building on a record-setting week, as gains in tech shares and some developments on coronavirus treatments drove the bullish sentiment.
The Dow Jones Industrial Average jumped 219 points, or 0.8%. The S&P 500 climbed 0.8% as well as 1.3%.
Apple shares rose more than 3%. Amazon and Microsoft shares were also higher.
Monday’s early gains come as the number of new coronavirus cases continues to decline in the U.S. Since spiking by more than 64,000 cases, the number of new daily infections in the U.S. has not topped 49,000, according to Johns Hopkins University. On Sunday, there were less than 37,000 new confirmed cases, the data showed.
“I think something interesting may evolve in the weeks and months ahead,” said Tom Lee, head of research at Fundstrat Global Advisors, in a note. “I think it is entirely possible that USA COVID-19 cases crash to sub-10,000 in September.”
“The US is soon becoming one of the safest places in the World. And if this is true, capital will also want to seek the US” which means “stocks rise further,” Lee said.
On Sunday, the U.S. Food and Drug Administration issued an emergency use authorization of convalescent plasma for hospitalized Covid-19 patients, a treatment that uses blood plasma donated by people who’ve recovered from the virus.
President Donald Trump said at a news conference Sunday that the plasma treatment cuts the mortality rate by 35%.
The Trump administration is also considering fast-tracking an experimental coronavirus vaccine developed in the U.K. for use in the United States ahead of the nation’s upcoming presidential election, according to a Financial Times report.
Shares of casinos and airlines gained in premarket trading amid the coronavirus treatment developments.
A seemingly unstoppable rally in major technology shares last week pushed the S&P 500 to levels above its previous record set before the pandemic. The broad equity benchmark posted its fourth straight positive week and closed at a fresh record on Friday.
Apple jumped more than 8% last week ahead of its 4-for-1 stock split, bringing its 2020 gains to nearly 70%. Those gains continued on Monday.
The tech-heavy Nasdaq gained posted a six-week winning streak and notched its 36th intraday high. The Nasdaq has gained more than 26% this year.
But Bruce Bittles, chief investment strategist at Baird, thinks investors need to be careful as only a small group of stocks is contributing to the market’s rally.
“The S&P 500 and the NASDAQ hit new record highs last week but more stocks were down than up. Typically, the opposite should be true,” Bittles wrote in a note. “In a healthy rising market, the majority of stocks, groups and sectors should be rising along with the averages. On Friday, deteriorating market breadth was exhibited by roughly 200 stocks in the S&P 500 that were up and almost 300 were down.”
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