U.S. Stocks Open Higher as S&P 500 Nears Record

By Joe Wallace

U.S. stock indexes ticked higher Monday, signaling that the S&P 500 may edge toward a record high amid lackluster trading during the summer vacation period.

The Dow Industrials rose 0.2% at the open, while the S&P 500 was up 0.3% and the Nasdaq Composite gained 0.6%.

The broad S&P index has risen for three consecutive weeks and ended Friday a hair's breadth below its record closing high from February, shortly before the pandemic ravaged financial markets.

A burst upward by so-called cyclical stocks in the energy and financial sectors, which are sensitive to investors' perception of the U.S. economy, has powered the latest leg of the market's recovery from its March lows. Still, the pace of the advance has slowed in recent weeks as investors take stock of hurdles facing the economic recovery, stalled negotiations over a new stimulus package in Washington and tensions with China.

"We had this vibe that the bottom of the economic slump wasn't quite as bad as people's baseline forecast," said Lyn Graham-Taylor, senior rates strategist at Rabobank. "But there's also a feeling right now that the recovery is not going to be a quick 'V' shape, it's going to be slower."

Exceptionally thin holiday trading has also contributed to listless moves in stocks and bond yields, according to Mr. Graham-Taylor. "It will get busy in a few weeks or so," he added, citing the U.S. presidential election as one factor that will drive markets during the fall.

Just 3.24 billion shares changed hands on the New York Stock Exchange on Friday, the lowest number since New Year's Eve last year. So far this month, daily trading volumes on the exchange have been more than a fifth below the average for 2020 as a whole, according to Dow Jones Market Data.

Before the opening bell in New York, shares in Principia Biopharma jumped 9.2%. French pharmaceutical company Sanofi agreed to buy Principia in a deal that values the developer of a multiple-sclerosis treatment at $3.68 billion.

Bond and currency markets were also quiet. The yield on 10-year Treasury notes ticked down to 0.684%, from 0.708% Friday. The WSJ Dollar Index, which tracks the dollar against a basket of other currencies, slipped 0.1%.

In overseas markets, the Stoxx Europe 600 gauge edged up 0.3% as an advance in shares of basic-resource companies balanced a decline in travel and banking stocks.

Shares in Asia were broadly higher by the close of trading. China's Shanghai Composite Index advanced 2.3% after the People's Bank of China injected 700 billion yuan ($101 billion) into the banking system via its medium-term lending facility. The move could pave the way for lower benchmark lending rates.

However, Japan's Nikkei 225 fell 0.8% after data showed the Japanese economy endured its worst contraction on record in the second quarter. Gross domestic product fell 7.8% in the three months through June compared with the previous quarter, the biggest decline since at least 1980.

Global oil benchmark Brent crude edged down 0.1% to $44.76 a barrel. Later this week, ministers from the Organization of the Petroleum Exporting Countries and its allies will review compliance with production cuts.

In the U.S., the number of active oil rigs has fallen to a 15-year low after a plunge in prices forced companies to dial back production, oil field company Baker Hughes said Friday.

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