Written by STAN CHOE and DAMIAN J. TROISE AP Business Writers
(AP) — Wall Street is closing higher, joining a worldwide upswell by markets on Monday, as stocks push higher on hopes that the economy can continue its turnaround despite all the challenges ahead of it. The S&P 500 is 1.6% higher at the close, following up on similar gains in Europe and Asia.
Dealmaking lifted shares of Uber and Berkshire Hathaway. Treasury yields climbed after data showed improvements in the United States and Europe.
They’re the latest buoyant moves for markets, where investors are focusing on improvements and stimulus that central banks are supplying rather than on how damaged the economy remains.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story is below:
Wall Street joined a worldwide upswell by markets on Monday, as stocks push higher on hopes that the economy can continue its dramatic turnaround despite all the challenges ahead.
The S&P 500 was 1.3% higher in afternoon trading, following up on similar gains in Europe and Asia. The headliner was China’s market, which leaped 5.7% for its biggest gain since 2015, when it was in the midst of a bubble bursting. Treasury yields also climbed in a signal of rising optimism after reports detailed improvements in the U.S. and European economies.
The Dow Jones Industrial Average was up 379 points, or 1.5%, at 26,203, as of 1:44 p.m. Eastern time. The biggest companies once again led the way, and strength for Apple, Amazon and other tech-oriented titans helped push the Nasdaq composite up 2.1% toward another record.
They’re the latest buoyant moves for markets, where investors are focusing more on recent improvements in the economy and all the stimulus that central banks and governments are supplying than on how much pain still remains. Investors are also continuing to sidestep the mounting number of known coronavirus infections, at least for now.
“The economic damage isn’t going to be as dire and severe as was initially predicted,” said Peter Essele, head of portfolio management for Commonwealth Financial Network. “That helps explain the rebound.”
The worry is that if the pandemic keeps worsening, with hotspots stretching across the U.S. South and West, it could scare shoppers and businesses away from spending. The worse-case scenario for markets is that governments resume the lockdowns implemented during the spring, which led to the sudden recession that swept the world, and choke off the budding economic recovery. Either way, many economists expect it to take years for the global economy to return to its pre-pandemic output.
All the huge spending efforts to resuscitate the economy could also lead to a reckoning in the future. “We have now mortgaged our entire future to try and withstand this downturn,” said Essele.
At some point, the buildup in debt for the U.S. government could lead to higher taxes and interest rates. But markets generally see that as a potential problem for another day.
For now, the trend is still upward. Monday’s rally follows last week’s 4% gain for the S&P 500, which itself helped cap the best quarter for the U.S. stock market since 1998. The S&P 500 has rallied back to within 7% of the record set in February. It had been down nearly 34% in late March, when recession worries were most severe.
A report released Monday morning showed that U.S. services industries, which make up the bulk of the economy, snapped back to growth in June.
The results were much stronger than economists expected. They also followed reports from last week that showed U.S. employers added more workers than they cut for the second straight month and that U.S. manufacturing returned to growth in June.
Miner Freeport-McMoRan jumped 8.7% for the largest gain in the S&P 500 after it said sales of copper and gold were stronger in the latest quarter than it had earlier forecast.
Big tech-oriented companies also continued their dominance on expectations that they can continue to grow almost regardless of how the economy’s doing. Apple gained 2.6%, Microsoft rose 2.1% and Amazon climbed 4.5% to top $3,000 per share.
The immense size of these companies also gives their stocks’ movements much larger sway over market indexes. The Russell 2000 index of smaller stocks was up a more modest 0.8%.
Some dealmaking also helped to lift markets.
Berkshire Hathaway, led by famed bargain hunter Warren Buffett, has agreed to buy Dominion Energy’s operations for moving and storing natural gas. Berkshire Hathaway, which has a reputation for waiting until prices reach attractive lows before pouncing, will pay roughly $4 billion in cash under the deal, as well as assume $5.7 billion in debt.
Berkshire Hathaway’s Class B shares rose 2%. Dominion Energy fell 9.4%.
While announcing the sale, it also said that it and Duke Energy were canceling a controversial $8 billion natural-gas pipeline project.
Duke dropped 2.7%.
Uber rose 5.8% after it said it will buy food-delivery business Postmates for $2.65 billion in stock. The deal would fold Postmates in with Uber’s Uber Eats unit.
The yield on the 10-year Treasury rose to 0.69% from 0.67% late Thursday. Markets were closed Friday for Independence Day. The yield tends to move with investors’ expectations for the economy and inflation.
In Europe, Germany’s DAX returned 1.6%, and France’s CAC 40 rose 1.5%.
The FTSE 100 in London added 2.1%. Retail sales rebounded in May in the 19 countries that use the euro, while car sales in Britain picked up in June as lockdown measures were eased.
In Asia, Japan’s Nikkei 225 rose 1.8%, South Korea’s Kospi gained 1.7% and the Hang Seng in Hong Kong jumped 3.8%.
Benchmark U.S. crude edged up 0.1% to $40.68 per barrel. Brent crude, the international standard, gained 0.9% to $43.20 per barrel.