S&P 500 and Nasdaq close at record highs to start September, Dow jumps more than 200 points

U.S. economy needs over $1 trillion in fresh coronavirus stimulus, says world's biggest hedge fund
U.S. economy needs over $1 trillion in fresh coronavirus stimulus, says world's biggest hedge fund

Stocks rose on Tuesday, led by tech shares, as traders kicked off a historically tough month for the market on the right foot and built on Wall Street's best August performance since the 1980s.

The Dow Jones Industrial Average gained 215.61 points, or 0.8%, to close at 28,645.66. The S&P 500 climbed 0.8% to 3,526.65 and the Nasdaq Composite advanced 1.4% to 11,939.67. Both the S&P 500 and Nasdaq hit all-time highs.

Apple led the gains in tech, rising 4%. The stock got a boost as several Wall Street analysts hiked their price targets on the tech giant. That gain came a day after the stock rose more than 3% following a stock split that appears to be causing investors to snap up the shares.

Walmart shares climbed more than 6% after the retailer announced it would launch its own membership program, Walmart+, later this month. 

Shares of Zoom Video jumped 40.8% after reporting another blowout quarter. The video conferencing company's revenue more than quadrupled in the fiscal second quarter compared to a year ago. 

"That's just the playbook investors are reading right now. They're playing the momentum game, but at some point, I think that shifts," said Brent Schutte, chief investment strategist for Northwestern Mutual Wealth Management. "As the economic recovery continues, I think you will see a broadening of the stocks participating in this rally."

The major averages also got a boost on Tuesday from better-than-expected manufacturing data out of the Institute for Supply Management. The final read on the firm's August manufacturing PMI came in at 56, a 19-month high, as new orders hit their highest level since 2004.

Tesla fell 4.7% after a regulatory filing revealed the company would sell up to $5 billion of its own stock

The S&P 500 and the Dow just wrapped up their best August in more than 30 years. The blue-chip average rallied 7.6% in August for its fifth positive month in a row and its biggest August gain since 1984. The S&P 500 also rose for a fifth month straight, up 7%, clinching its best August since 1986.

The tech-heavy Nasdaq jumped 9.6% in August, posting its best monthly performance since 2000.

"While growth and momentum names continue to be the primary driver of returns, value and cyclicals have begun to participate," Mark Hackett, Nationwide's chief of investment research, said in a note on Monday.

Along with tech, reopening stocks — cruise line operators, airlines and hotels — had a big August. Royal Caribbean and MGM Resorts both gained about 40%, while FedEx and Gap jumped 30% each. Delta Air Lines and Norwegian Cruise Line were also among the S&P 500 leaders in August.

The Dow's composition changed on Monday with Apple's 4-for-1 stock split taking effect. Salesforce, Amgen and Honeywell replaced longtime components Exxon Mobil, Pfizer and Raytheon Technologies.

To be sure, September has historically been the worst month for the market since 1950, according to data from the Stock Trader's Almanac. The data shows that the Dow averages a loss of 0.7% in September while the S&P 500 averages a 0.5% decline. 

Investors are awaiting a key monthly jobs report on Friday, which is forecast to show payrolls continued to rebound in August. Economists polled by Dow Jones forecast that 1.255 million jobs were created in August.

"With regard to US jobs, it's important to keep in mind that the Fed's new inflation target policy may impact how the market receives this news," Kristina Hooper, Invesco's chief global market strategist, said in a note.

"Normally, a good jobs report would spark concern that the Fed might tighten in order to proactively combat inflation and economic overheating. That concern has gone by the wayside, at least for now, with the Fed's new policy," Hooper said.

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