(Reuters) – The Nasdaq index hit a record high on Monday as investors remained optimistic at the start of a busy week of earnings from mega-cap technology companies, while economy-sensitive cyclical stocks gave back recent gains.
The so-called “stay-at-home” winners including Microsoft Corp, Facebook Inc and Apple Inc rose between 1.7% and 4.3%, following upbeat results from Netflix Inc last week.
Microsoft, scheduled to report results on Tuesday, rose 0.7% as Wedbush raised its price target on the software maker’s stock on expectations of further growth in its cloud business for 2021.
“All eyes are on tech as it now has a chance to regain some of the strength that it lost in recent months,” said Thomas Hayes, chairman of Great Hill Capital in New York.
The S&P 500 technology sector rose 1.1%, while Tesla Inc added 6.1% ahead of its quarterly results on Wednesday.
Earnings for S&P 500 companies are expected to rise 23.7% this year after falling 14.1% in 2020, according to Refinitiv.
Investors were hopeful that officials in President Joe Biden’s administration could head off Republican concerns that his $1.9 trillion pandemic relief proposal was too expensive, even as lawmakers from both parties agreed that getting the COVID-19 vaccine to Americans should be a priority.
“We’re focused on two things this week, whether big-tech can deliver, which we are pretty optimistic about, and whether Congress can move ahead with the stimulus package that the market is anticipating,” Hayes said.
Wall Street’s main indexes touched record highs last week on hopes of a full economic reopening and efficient distribution of vaccines across the country, which is suffering from more than 175,000 new COVID-19 cases a day with millions out of work.
However, the Dow Jones Industrial Average index and the S&P 500 struggled to keep up with the tech-heavy Nasdaq’s rally, as recent gainers including sectors such as financials, energy, industrials and materials all took a beating on Monday.
At 10:00 a.m. ET the Dow Jones Industrial Average fell 172.22 points, or 0.55%, to 30,824.76, the S&P 500 gained 10.10 points, or 0.26%, to 3,851.52, and the Nasdaq Composite gained 169.61 points, or 1.25%, to 13,712.89.
Merck & Co Inc fell 0.8% after the drugmaker said it would stop development of its two COVID-19 vaccines citing inferior immune responses.
Advanced Micro Devices Inc added 1.3% after RBC raised its price target on the chipmaker’s shares.
Videogame retailer GameStop Corp surged 52.2%, after having already gained about 250% since the beginning of 2021. Traders noted that the jump in shares could be short-sellers quickly buying back into the stock to cover potential losses and retail investors piling in to benefit from the surge.
Declining issues outnumbered advancers for a 1.3-to-1 ratio on the NYSE and matched them on the Nasdaq.
The S&P 500 posted 19 new 52-week highs and no new low, while the Nasdaq recorded 356 new highs and six new lows.
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