By Anna Isaac and Alexander Osipovich
U.S. stocks jumped Monday, with the technology-heavy Nasdaq Composite poised to notch another record as investors' infatuation with tech shares continued.
Big tech stocks, including Apple, Microsoft and Amazon.com, have powered the market from its late March low in the midst of the coronavirus-fueled selloff. All three stocks have jumped at least 33% this year, helping to put the Nasdaq on course Monday for its 28th record close of the year.
The rally in tech stocks has shown no signs of slowing: The index is up about 9% over the past two weeks, bringing its gains for the year to 19%. Some analysts have said they expect tech stocks to continue powering the market higher, partly because of changes in consumer behavior during the pandemic that have boosted the business models of those companies.
Amazon shares rose 2.1% Monday, while Apple was up 2.6%. Tesla, another highflier, rallied 6% on optimism ahead of next week's earnings report. The electric-car maker now has a greater market capitalization than JPMorgan Chase, the biggest U.S. bank, as well as many traditional titans of industry.
Those gains helped push the Nasdaq up 0.7%. The Dow Jones Industrial Average added 450 points, or 1.7%. The S&P 500 rose 1%--and is on the verge of returning to positive territory for the year.
The Dow and S&P 500 have also surged more than 40% since late March, but they remain down 10% and 5% from their February records.
Markets have also gotten a boost from optimism about progress toward a Covid-19 vaccine. Pfizer and German biotech company BioNTech said Monday that they received "fast track" designation from the Food and Drug Administrations for two coronavirus vaccine candidates that they are partnering on, allowing them to speed up testing.
Pfizer shares added 5.4% to lead the Dow.
Meanwhile, investors were looking ahead to second-quarter earnings season for any signals about the shape and pace of economic recovery following the disruption caused by the pandemic.
Economists generally agree that the quarter ended in June was likely the worst of the downturn, but the extent of the damage is still unclear. The rise in U.S. coronavirus cases has prompted renewed restrictions on business and social gatherings in some areas and threatens to slow down the economy's revival.
"There's some optimism about the tone of the upcoming earnings," said Jane Foley, senior foreign exchange strategist at Rabobank. "People have written off the second quarter, but they have high expectations for the third quarter."
Earnings for S&P 500 companies are expected to decline nearly 45% compared with the second quarter of 2019, which would mark the steepest year-over-year drop since 2008, according to FactSet.
Shares of PepsiCo rose 1.7% as the food and beverage giant posted better-than-expected revenue for the latest quarter. The company said snacks sales rose as Covid-19 shelter-in-place measures and closures eased during the period.
"The environment has remained volatile and much uncertainty remains about the duration and long-term implications of the pandemic," Pepsi Chief Executive Ramon Laguarta said.
Earnings from big banks, including JPMorgan Chase and Goldman Sachs Group, and Netflix are on tap for later in the week.
"The markets are looking out six months from now, and saying that things will be a whole lot better by then," said Randy Frederick, vice president of trading and derivatives at Charles Schwab. He cautioned that uncertainty about the pandemic or the upcoming U.S. election could still sour the market's rally in the coming months.
Total U.S. coronavirus cases topped 3.3 million on Monday and the nation's death toll exceeded 135,000, according to data compiled by Johns Hopkins University. Thirty-two states had increases of at least 10% in cases over the past week, prompting public-health experts to warn it may become difficult to halt the spread.
"The rising numbers of cases in the U.S. are just not generating as much fear as they had before," said Seema Shah, chief strategist at Principal Global Investors. "The death rates aren't rising as quickly as infection rates. It suggests that the virus is being managed better than before or it's more focused on the younger generation, suggesting a less severe economic reaction."
All 11 of the S&P 500's sectors were in positive territory on Monday, led by health-care and consumer-discretionary stocks.
Shares of Olive Garden owner Darden Restaurants, which has been hurt this year by coronavirus-related cafe closures, gained 4.9% after it was upgraded by analysts at JPMorgan.
Shares of chip maker Maxim Integrated jumped 11% after Analog Devices said it would buy its rival in an all-stock transaction. The deal values the combined companies at more than $68 billion, according to their own valuations. Analog shares were down 3.7%.
Overseas, the pan-continental Stoxx Europe 600 rose 1%. Most major Asian markets ended the day sharply higher, with the Shanghai Composite Index rising 1.8%.
The Shanghai index has climbed nearly 13% this year, making it one of the world's best-performing major indexes. Growing conviction that China's economy is recovering from the coronavirus has encouraged investment in Chinese stocks from foreign institutions and the millions of individual investors who dominate trading in China.
Vincent Wen, an investment manager at KCG Securities Asia, said the recent Chinese rally has been too fast, driven by official messages and the prospect of easy monetary policy.
"Fundamentally speaking, the real economy remains weak and the path to recovery will be bumpy," Mr. Wen said.
The yield on the 10-year U.S. Treasury ticked up to 0.643%, from 0.633% on Friday, as investors sold government bonds. Yields move in the opposite direction from prices.
Joanne Chiu contributed to this article.
Write to Anna Isaac at firstname.lastname@example.org and Alexander Osipovich at email@example.com