Wall Street gains on surprise services data, China-led rebound hopes

(Reuters) – Wall Street’s major indexes climbed on Monday as data showing unexpected growth in the U.S. services sector last month and optimism over China’s economic revival helped investors look past a surge in new cases of COVID-19 at home.

The ISM’s non-manufacturing activity index jumped to 57.1 in June, almost returning to pre-pandemic levels, but a recent surge in COVID-19 cases in the United States has threatened the emerging recovery.

During Asian hours, Chinese stocks surged 5% on ample liquidity, cheap funding and expectations of a faster and a better bounce-back in business activity than other major countries that are still battling the coronavirus crisis. [.SS]

A slew of upbeat U.S. data, including a record rise in June payrolls, has powered the Nasdaq to all-time highs and brought the S&P 500 and the Dow about 6% and 11% below their respective peaks from February.

“Investors are more focused on what the other side of this pandemic looks like, as opposed to the short-term risks of shutdowns,” said Matt Lindholm, managing director – investment strategies at CAZ Investments in Houston.

A sharp jump in COVID-19 cases recently in the United States has cast a shadow over the strong rally in stocks as many states have curtailed their reopening plans, threatening to derail the economic recovery.

During the Independence Day weekend, several states reported a record increase in new infections, with Florida surpassing the highest daily tally reported by any European country during the peak of the outbreak.

At 10:18 a.m. ET, the Dow Jones Industrial Average was up 322.73 points, or 1.25%, at 26,150.09, the S&P 500 was up 41.08 points, or 1.31%, at 3,171.09 and the Nasdaq Composite was up 187.95 points, or 1.84%, at 10,395.58.

All the 11 major S&P sectors were trading higher, with technology and financial stocks providing the biggest boost to the benchmark S&P 500.

Among individual shares, Tesla Inc surged 7.4%, building on a four-day rally, after JPMorgan bumped up its price target for the electric carmaker’s stock following its better-than-expected quarterly deliveries.

Uber Technologies Inc climbed 4.4% after the ride-sharing company agreed on a deal to buy food-delivery app Postmates Inc in a $2.65-billion all-stock agreement.

Regeneron Pharmaceuticals Inc gained 1.5% as the drugmaker said it had begun late-stage clinical trials to assess the effectiveness of its antibody cocktail in preventing and treating COVID-19.

Dominion Energy Inc and Duke Energy Corp fell 6.1% and 1.5%, respectively, after the energy firms abandoned the $8-billion Atlantic Coast Pipeline project after a long delay to clear legal roadblocks almost doubled its estimated cost.

Advancing issues outnumbered decliners by a 4.28-to-1 ratio on the NYSE, and a 2.50-to-1 ratio on the Nasdaq.

The S&P index recorded 31 new 52-week highs and no new low, while the Nasdaq recorded 115 new highs and nine new lows.

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