Wall Street’s major indexes opened higher on Monday as news of technology mega-deals in the works helped tech stocks shake off recent setbacks.
The Dow Jones Industrial Average was up 1.27 percent at 28,016.60 in mid-morning trading in New York. The S&P 500 – a gauge for the health of US retirement and college savings reports – was up 1.7 percent, while the tech-heavy Nasdaq Composite Index was 2.24 percent in the green.
Shares of Oracle Corp were up 6.71 percent after it confirmed it has struck a deal with TikTok’s Chinese parent ByteDance to become its preferred US partner. Any deal would still have to clear a US government national security review, and possibly get sign off from Chinese regulators.
US President Donald Trump, citing national security concerns, has given ByteDance until September 20 to sell TikTok’s US operations or shut them down.
A Microsoft Corp-led consortium that included Walmart was also in talks to buy TikTok’s US operations. But news broke late on Sunday that the deal had fallen apart.
Meanwhile, shares of Nvidia Corp were up 7.08 percent after it announced a $40bn deal to buy United Kingdom-based chip designer Arm from Japan’s SoftBank Group Corp.
If completed, the deal would be the chip industry’s biggest-ever merger and give a US company a serious edge in an industry at the centre of US-China tensions over global tech-supremacy.
With just 50 days to go until the November 3 US presidential election, US markets are coming off of a volatile week that knocked the Nasdaq Composite Index down as much as 10 percent from its highs and rocked other indexes.
Despite last week’s sharp sell-offs, analysts at Goldman Sachs say they remain optimistic that efforts to develop a coronavirus vaccine will help drive markets higher before the year is out.
“Although earnings revisions have stalled in the past month, we expect further reopening and vaccine progress will catalyze another move higher in estimates,” Goldman analysts wrote in a note on Monday.
Goldman Sachs forecasts that the S&P 500, which came within 20 points of the 3,600 year-end target before retreating, will rise to 3,600 by the end of the 2020 and 3,800 by mid-year 2021, driven by improving earnings prospects and a declining risk premium.
But while Wall Street’s fortunes may be looking up, the economic recovery on Main Street is severely lagging.
Negotiations in Congress for another round of virus-relief aid have stalled and a slew of pandemic assistance programmes are set to expire on December 31, including the CDC’s nationwide moratorium on evictions.