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Stock Benchmarks Close Higher to Start the Week

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09/14/2020 | 05:14pm EDT

By Alexander Osipovich and Joe Wallace

A rebound in technology shares lifted U.S. stocks Monday, helping major indexes recover after last week's pullback.

Deal activity at software giant Oracle and chip maker Nvidia contributed to the bounce in tech stocks. Both companies' shares rallied more than 4% after Oracle won the bidding for the U.S. operations of video-sharing app TikTok and Nvidia agreed to buy British chip-designer Arm Holdings in a potentially transformative deal.

The tech-heavy Nasdaq Composite jumped 203.11 points, or 1.9%, to 11056.65 after last week suffering its biggest one-week decline since the March market crisis.

The Dow Jones Industrial Average climbed 327.69, or 1.2%, to 27993.33, while the S&P 500 advanced 42.57, or 1.3%, to 3383.54.

Monday's advance extends a spell of outsize moves in both directions for U.S. stock indexes, much of it driven by shares of large technology companies that have powered the market's recovery since the spring.

Stocks like Apple and Microsoft had soared in recent months, with investors betting tech companies were better positioned to handle the Covid-19 pandemic than more traditional industries. Rock-bottom interest rates also pushed investors into riskier assets. But the tech rally abruptly lost steam this month. Even with Monday's gains, the Nasdaq remains more than 8% below the record highs it reached in early September.

Mike Dowdall, a portfolio manager at BMO Global Asset Management, said he was being cautious on tech stocks because of their lofty valuations. "Even though the economic story is really strong, it's hard to step into that trade at the moment," he said.

Stocks have been also buffeted this month by uncertainty about the U.S. presidential election and worries that the economic recovery, which appeared vigorous earlier this summer, could be slowing.

"We're shifting into an environment of lower returns and higher volatility and this is not inconsistent with that," said James McCormick, global head of desk strategy at NatWest Markets. He added: "I think the upside is going be a bit capped here until we get through some of these events and risks."

Investor sentiment was boosted by the resumption of clinical trials of AstraZeneca's experimental coronavirus vaccine in the U.K. Studies were put on pause globally after a person who received the vaccine had an unexplained illness. Trials in other countries, including the U.S., remain on hold.

"There's a bit more positivity as regards vaccines," said Robert Carnell, head of research for Asia-Pacific at ING Groep. "The resumption of AstraZeneca trials will be seen in that light."

Gains were broad Monday, with all 11 of the S&P 500's sectors advancing. The tech sector was among the biggest gainers with a 2.1% climb.

Oracle shares rose $2.46, or 4.3%, to $59.46 after it beat Microsoft in the race for TikTok, according to people familiar with the matter. Nvidia shares gained $28.31, or 5.8%, to $514.89 after it agreed to buy Arm Holdings for more than $40 billion from SoftBank Group Corp.

Investors welcomed news that ViacomCBS is close to selling CNET Media Group to Red Ventures, pushing Class B shares in the entertainment giant up 69 cents, or 2.4%, to close at $29.73.

Gilead Sciences shares rose $1.44, or 2.2%, to $66.34 after the pharmaceutical company said it would pay $21 billion to buy biotech Immunomedics and its prized breast-cancer drug.

Citigroup shares dropped $2.85, or 5.6%, to $48.15 after The Wall Street Journal reported that federal regulators were preparing to reprimand the bank for failing to improve its risk-management systems.

Elsewhere, the Stoxx Europe 600 rose 0.1%. In Asia, China's Shanghai Composite Index gained 0.6%.

Write to Alexander Osipovich at alexander.osipovich@dowjones.com and Joe Wallace at Joe.Wallace@wsj.com

 


Stocks mentioned in the article
ChangeLast1st jan.
APPLE INC. -5.60% 108.86 Delayed Quote.48.29%
ASTRAZENECA PLC -1.40% 7766 Delayed Quote.2.09%
CITIGROUP INC. 0.66% 41.42 Delayed Quote.-48.15%
DJ INDUSTRIAL -0.59% 26501.6 Delayed Quote.-7.14%
GILEAD SCIENCES, INC. -0.65% 58.15 Delayed Quote.-10.51%
IMMUNOMEDICS, INC. 0.05% 87.86 End-of-day quote.315.22%
ING GROEP N.V. 1.81% 5.859 Delayed Quote.-45.18%
MICROSOFT CORPORATION -1.10% 202.47 Delayed Quote.28.39%
NASDAQ 100 -2.62% 11052.94579 Delayed Quote.26.56%
NASDAQ COMP. -2.45% 10911.59093 Delayed Quote.21.61%
NVIDIA CORPORATION -3.76% 501.36 Delayed Quote.113.07%
S&P 500 -1.21% 3269.96 Delayed Quote.1.21%
S&P/CITIC 300 INDEX 0.03% 4097.16 Delayed Quote.15.36%
S&P/CITIC 50 INDEX 0.02% 4085.34 Delayed Quote.9.32%
SOFTBANK GROUP CORP. -1.65% 6793 End-of-day quote.42.83%
STOXX EUROPE 600 0.18% 342.36 Delayed Quote.-17.67%
STOXX EUROPE 600 NR 0.18% 753.21 Delayed Quote.-16.07%
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