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U.S. Stocks Close Mostly Higher Amid Optimism About Stimulus

wallstreet sept12 27jul20 lt

Following the pullback seen late last week, stocks moved back to the upside during trading on Monday. The tech-heavy Nasdaq showed a particularly strong upward move, as some traders cycled back into big-name tech stocks.

The major averages all closed in positive territory, although the Nasdaq outperformed its counterparts. While the Nasdaq surged up 173.09 points or 1.7 percent to 10,536.27, the Dow rose 114.88 points or 0.4 percent to 26,584.77 and the S&P 500 climbed 23.78 points or 0.7 percent to 3,239.41.

The strength on Wall Street partly reflected optimism about additional fiscal stimulus after Treasury Secretary Steven Mnuchin said Republicans have finalized their new coronavirus relief legislation.

Mnuchin told "Fox News Sunday" the GOP intends to introduce the $1 trillion bill on Monday after delaying the planned rollout last week.

Despite the vast gap in the price tags of the Republican plan and a $3 trillion bill passed by the Democrat-controlled House, Mnuchin said he expects lawmakers can move "very quickly" to address the differences.

"We've moved quickly before and I see no reason why we can't move quickly again," Mnuchin said. "And if there are issues that take longer, we'll deal with those as well."

White House economic advisor Larry Kudlow revealed in a separate interview with CNN's "State Of The Union" that the GOP relief bill includes another $1,200 stimulus payment to Americans.

In economic news, the Commerce Department released report showing durable goods orders continued to move sharply higher in the month of June.

The Commerce Department said durable goods orders surged up by 7.3 percent in June after skyrocketing by a downwardly revised 15.1 percent in May. The continued increase comes following the nosedive seen in March and April.

Economists had expected durable goods orders to soar by 7.2 percent compared to the 15.7 percent spike that had been reported for the previous month.

Excluding another substantial increase in orders for transportation equipment, durable goods orders still jumped by 3.3 percent in June after shooting up by 3.6 percent in May. Ex-transportation orders were expected to surge up by 3.5 percent.

Sector News

Gold stocks showed a substantial move to the upside on the day as the price of the precious metal soared to a new record high.

With gold for August delivery spiking $33.50 to $1,931 an ounce, the NYSE Arca Gold Bugs Index surged up by 4.7 percent to its best closing level in over seven years.

Significant strength was also visible among semiconductor stocks, as reflected by the 3.2 percent jump by the Philadelphia Semiconductor Index.

Taiwan Semiconductor (TSM) led the sector higher after a report from the China Times said Intel (INTC) has placed orders with the chipmaker for 6-nanometer chips.

Housing stocks also moved sharply higher over the course of the trading session, driving the Philadelphia Housing Sector Index up by 3.2 percent to a five-month closing high.

Steel, biotechnology and computer hardware stocks also saw considerable strength on the day, while natural gas, banking and utilities stocks showed notable moves to the downside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan's Nikkei 225 Index slipped by 0.2 percent, while China's Shanghai Composite Index rose by 0.3 percent.

The major European markets also ended the day mixed. While the German DAX Index closed just above the unchanged line, the U.K.'s FTSE 100 Index and the French CAC 40 Index both fell by 0.3 percent.

In the bond market, treasuries came under pressure in afternoon trading after showing a lack of direction earlier in the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2 basis points to 0.609 percent.

Looking Ahead

Traders are likely to keep an eye on a report on consumer confidence in the month of July on Tuesday, although trading activity may be somewhat subdued ahead of the Federal Reserve's monetary policy decision on Wednesday.

On the earnings front, 3M (MMM), Harley-Davidson (HOG), JetBlue (JBLU), McDonald's (MCD), and Pfizer (PFE) are among the companies due to report their quarterly results before the start of trading on Tuesday.

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