Nasdaq hits all-time high, Amazon tops $3,000 despite virus surge

After a record number of COVID-19 cases were recorded over the Fourth of July, Amazon, Uber and Tesla led Wall St gains.

Wall Street
The front facade of the New York Stock Exchange is seen in New York City, New York, the United States, where Wall Street continued to climb despite several states reporting a surge in new coronavirus cases over the Fourth of July holiday weekend [File: Brendan McDermid/Reuters]

Despite fears of a surge in coronavirus cases disrupting the United States economic recovery, Wall Street once again mounted unbridled optimism, powering the Nasdaq to a record close on Monday and the S&P 500 to its fifth consecutive plus-side finish. 

The Dow Jones Industrial Average ended the day up 1.78 percent at 26,287.03. The S&P 500 – a proxy for the health of US retirement and college savings accounts – gained 1.59 percent to finish at 3,179.72. And the day’s big winner – the tech-heavy Nasdaq Composite Index – jumped 2.21 percent to close at 10,433.65. helped lead the Nasdaq’s record charge, with shares of the online retail, cloud computing and media giant closing above $3,000 for the first time. Shares of Tesla also continued to scale gravity-defying heights to close 13.48 percent higher.

Shares of Uber Technologies Inc climbed 5.1 percent after the company agreed to buy food-delivery app Postmates Inc in a $2.65bn all-stock deal. The acquisition will help Uber grow its share of the meal delivery market after its core ride-hailing business was gutted by the coronavirus pandemic. 

US President Donald Trump – who has made his handling of the economy a cornerstone of his re-election campaign – took to Twitter on Monday morning to laud the Nasdaq’s performance. Later in the afternoon, he tweeted “our Economy is coming back strong!”

Wall Street surfaced from the Fourth of July weekend riding a wave of optimism out of China as investors continue to bet that a recovery in the world’s second-largest economy will help fuel a global rebound. 

An upbeat read on the US services sector also injected a healthy dose of optimism in the New York trading session after the Institute for Supply Management reported that its non-manufacturing index for June jumped to its strongest reading since February. 

While the Nasdaq scaled new heights, the other major US indexes moved closer to wiping out their losses for the year. The S&P 500 is only about 6 percent below its February peak and the Dow is some 11 percent below its record high from that month.

Analysts, however, warn that the recent spike in gains may subside.  

“The bad news is that sustaining the pace of recovery will get increasingly difficult from here,” Neil Shearing, Group Chief Economist at Capital Economics, wrote in a note on Monday.

“For a start, the alarming rise in new infections in several ‘Sun Belt’ states in the south of the US is a reminder that the path out of lockdowns will not be smooth,” Shearing added. 

Goldman Sachs economists led by Jan Hatzius also injected a note of caution in the outlook. Citing reopening plans in US cities and states being either postponed or rolled back as COVID-19 cases surge, Goldman lowered its estimate for US third-quarter economic growth.  

“From a market perspective, our key forecasts are that a) global economic activity continues to rebound as the world learns to live with the virus by keeping selective restrictions such as face masks and bans on large gatherings in place and b) the US underperforms in the near term as it partly reverses its overly hasty reopening in the consumer sector,” Goldman wrote in a note to clients. 

Source: Al Jazeera