Stocks closed sharply higher on Monday, led by strong gains in the tech sector, as Wall Street built on the momentum from last week's solid performance and shook off a continued rise in coronavirus cases.
The Dow Jones Industrial Average rose 459.67 points, or 1.8%, to 26,287.03. The S&P 500 popped 1.6% to end the day at 3,179.72. The Nasdaq Composite hit an all-time high, surging 2.2% to 10,433.65.
There were a few reasons for the bullish lift to start the week:
- The biggest technology companies led the gains with Apple, Amazon, Microsoft and Google-parent Alphabet all climbing at least 2%. Amazon shares also broke above $3,000 for the first time. Netflix shares reach an all-time high as well. The Nasdaq-100 — which is made up of the composite's 100-largest nonfinancial stocks — jumped 2.5% on Monday, bringing its 2020 gains to more than 21%.Â
- Dealmaking also boosted sentiment. Warren Buffett made his first major deal amid the market turmoil this year, with Berkshire Hathaway buying the natural gas transmission and storage assets from Dominion Energy for about $10 billion including debt. Dominion Energy fell 11%, while Berkshire shares gained 2.4%. Uber shares gained 6% after it said it was buying food-delivery app Postmates in an all-stock deal worth $2.65 billion.
- Chinese stocks soared, with the Shanghai Composite jumping more than 5%, as that country continued to open up following their coronavirus outbreak. The iShares China Large-Cap ETF (FXI) surged 9.5% for its best day since 2009.
- Data from the Institute for Supply Management showed a surprise expansion in the U.S. services sector. The firm's nonmanufacturing index rose to 57.1 in June, topping a Dow Jones estimate of 50.1.Â
- Stocks built on their momentum to start the second half. The Dow and S&P 500 rose 3.3% and 4%, respectively, last week and the Nasdaq advanced 4.6% in that time. The market also wrapped up last week its best quarterly performance in decades.
"The economy is doing a lot better than most of the economists think," said Jeff Saut, chief investment strategist at Capital Wealth Planning, to CNBC's "Squawk Box" on Monday. "We may stall here for a while into the fall, into September, October, November, but I think you're going to get a rocket ship coming in the fall of this year...I think the S&P 500 is going to trade above 4,000."
Monday's gains came even as the number of coronavirus cases kept surging globally, raising concerns about the world economy and its recovery from the pandemic.
The World Health Organization said Saturday that more than 200,000 coronavirus cases were confirmed over a 24-hour span, a record. At a regional level, the biggest spike was seen in the Americas, where nearly 130,000 new cases were confirmed.
In the U.S., coronavirus-related hospitalizations grew in more than 20 states, including, Florida, Texas, Arizona and Georgia.Â
"We are currently experiencing a spike in Covid-19 cases, particularly in the sunbelt states that were in the vanguard of loosening social distancing restrictions to facilitate the reopening of their economies," said Marc Chaikin, CEO of Chaikin Analytics, in a post.
"That reopening momentum has been halted by the spike in Covid-19 cases and the temptation to translate this into a bearish outlook for stocks is strong," he added. "Fatalities have not spiked, however, but are a lagging indicator. Thus the next two weeks are critical for a number of reasons."
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