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Wednesday, August 12, 2020  Spokane, Washington  Est. May 19, 1883
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Stocks advance on tech rally, stimulus talks

UPDATED: Fri., July 31, 2020

This photo from July 30, 2020, shows a man standing on a balcony overlooking Wall Street. U.S. stocks extended their July gains Friday amid a rally in technology shares.  (Associated Press)
This photo from July 30, 2020, shows a man standing on a balcony overlooking Wall Street. U.S. stocks extended their July gains Friday amid a rally in technology shares. (Associated Press)
By Rita Nazareth and </p><p>Amena Saad Bloomberg

U.S. stocks extended their July gains amid a rally in technology shares and on news the White House and Democrats are planning to meet Saturday to discuss the next virus-relief package. Treasury 10-year yields headed toward a record low.

Chief of Staff Mark Meadows said the administration is willing to compromise after House Speaker Nancy Pelosi said Republicans didn’t have the votes to extend the $600 per week unemployment benefit that’s propped up incomes and spending. The Nasdaq 100 outperformed on solid earnings from giants such as Apple Inc. and Inc. Microsoft Corp. erased declines on a news report it’s exploring an acquisition of TikTok’s operations in the U.S. Exxon Mobil Corp. and Chevron Corp. sank after posting losses. Earlier Friday, equities slumped after Florida posted a fourth straight record in deaths by COVID-19, Arizona’s cases accelerated and New Jersey’s virus transmission rate jumped.

In a very volatile session, the S&P 500 was still on track to notch its fourth consecutive monthly advance. However, signs the economic rebound is stalling might make it tougher for stocks to gain further momentum.

U.S. consumer sentiment extended its slide in late July as the resurgent coronavirus led to renewed business closings and layoffs. The extra federal unemployment benefits of $600 a week run dry as of Friday – leaving millions of out-of-work Americans without an additional safety net at a time when the jobs market is still depressed.

“With the impact of past stimulus measures fading and given some evidence that the global recovery has already stalled, it remains to be seen what will help keep global stock markets elevated in the coming months, especially U.S. stocks,” said Fawad Razaqzada, a market analyst at ThinkMarkets. “There is a risk we may see a correction in August, although it doesn’t have to be as severe as the one we saw in March, for things have since improved and monetary conditions are even more accommodative.” Tech companies continued to lead the advance in 2020, and their results are a validation for bulls who have bet the industry would emerge from the pandemic stronger than the rest of the market. Since the bottom in March, the Nasdaq 100 has added about $4 trillion in market value. It’s poised to beat the benchmark gauge for a 10th straight month – the longest winning streak in 20 years.

Despite the tech resilience, Michael Sheldon, chief investment officer at RDM Financial Group, said it’s very possible the market could enter a trading range over the next month or two because there’s still a lot of uncertainty.

“If you look ahead 12 to 18 months, the economy is likely to continue to recover from the deep downturn caused by COVID-19,” he said. “However, it’s important for investors to know that the recovery in the economy is not likely to be in a straight line. There will likely be bumps around the way.”

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