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Tech Stocks May Continue To Lead The Way Higher On Wall Street

The major U.S. index futures are currently pointing to a higher opening on Monday, with technology stocks likely to help lead the markets higher once again.

Shares of Microsoft (MSFT) are moving significantly higher in pre-market trading after the software giant confirmed it is in talks to acquire Chinese-owned video app TikTok.

The statement from Microsoft comes just days after President Donald Trump revealed plans to ban TikTok in the U.S. due to national security concerns.

Apple (AAPL), Amazon (AMZN) and Google parent Alphabet (GOOGL) are also seeing pre-market strength after reporting better than expected quarterly results last week.

Early buying interest may also be generated in reaction to upbeat economic data from overseas, with a report showing the Chinese manufacturing sector expanded at the fastest pace since early 2011.

The Caixin manufacturing Purchasing Managers' Index rose to 52.8 in July from 51.2 in June, as market conditions continued to recover from the coronavirus outbreak.

A separate report showed the euro area manufacturing sector returned to growth in July for the first time in a year and a half as output and demand continued to recover.

Shortly after the start of trading, the Institute for Supply Management is scheduled to release its report on activity in the U.S. manufacturing sector in the month of July.

Stocks saw considerable volatility over the course of the trading session on Friday before eventually ending the day mostly higher. The major averages all moved to the upside late in the session, with the tech-heavy Nasdaq showing a particularly strong upward move.

After falling as much as 300 points, the Dow ended the day up 114.67 points or 0.4 percent at 26,428.32. The Nasdaq surged up 157.46 points or 1.5 percent to 10,745.27 and the S&P 500 climbed 24.90 points or 0.8 percent at 3,271.12.

Despite the advance on the day, the major averages turned in a mixed performance for the week. The Dow dipped by 0.2 percent, while Nasdaq soared by 3.7 percent and the S&P 500 jumped by 1.7 percent.

The higher close on Wall Street partly reflected a positive reaction to better than expected quarterly results from several leading technology companies.

Shares of Apple spiked by 10.5 percent to a new record high after the tech giant reported better than expected fiscal third quarter results and announced a 4-for-1 stock split.

Amazon and Facebook (FB) also posted substantial gains after reporting quarterly results that exceeded analyst estimates on both the top and bottom lines.

On the other hand, Alphabet came under pressure despite reporting better than expected second quarter results. The company did report its first-ever quarterly drop in revenue.

The upbeat tech earnings news seemed to overshadow concerns about stalled negotiations over a new coronavirus stimulus package.

With the Republican-controlled Senate adjourning for the weekend on Thursday, a $600 weekly federal unemployment benefit is set to expire at the end of the day.

Democrats rejected a temporary extension of the jobless benefit, with Senate Minority Leader Chuck Schumer claiming a one-week extension "can't be implemented in time."

Lawmakers appear at an impasse as the attempt to reach a compromise between a $1 trillion GOP relief proposal and the $3.4 trillion bill passed by the Democratic-controlled House in May.

On the U.S. economic front, the Commerce Department released report showing personal income slumped by more than expected in the month of June, although the report also showed another substantial increase in personal spending.

The Commerce Department said personal income tumbled by 1.1 percent in June after plunging by a downwardly revised 4.4 percent in May.

Economists had expected personal income to decrease by 0.5 percent compared to the 4.2 percent nosedive originally reported for the previous month.

Meanwhile, the report said personal spending surged up by 5.6 percent in June after skyrocketing by an upwardly revised 8.5 percent in May.

Personal spending had been expected to jump by 5.5 percent compared to the 8.2 percent spike originally reported for the previous month.

A separate report from the University of Michigan showed consumer sentiment deteriorated by more than initially estimated in the month of July.

The report said the consumer sentiment index for July was downwardly revised to 72.5 from the preliminary reading of 73.2. The index is down from 78.1 in June and below economist estimates for a reading of 73.0.

"Consumer sentiment sank further in late July due to the continued resurgence of the coronavirus," said Surveys of Consumers chief economist Richard Curtin.

Gold stocks showed a substantial move to the upside on the day, driving the NYSE Arca Gold Bugs Index up by 3.3 percent.

The rally by gold stocks came amid a sharp increase by the price of the precious metal, with gold for December delivery spiking to a new record closing high.

Considerable strength also emerged among computer hardware stocks, as reflected by the 2.3 percent jump by the NYSE Arca Computer Hardware Index.

Meanwhile, oil service stocks climbed off their worst levels but still ended the day sharply lower, dragging the Philadelphia Oil Service Index down by 2.1 percent. The weakness among oil service stocks came despite an increase by the price of crude oil.

Steel, biotechnology and airline stocks also ended the day significantly lower, limiting the upside for the broader markets.

Commodity, Currency Markets

Crude oil futures are edging down $0.01 to $40.26 a barrel after rising $0.35 to $40.27 a barrel last Friday. Meanwhile, after jumping $19.10 to $1,985.90 an ounce in the previous session, gold futures are inching up $2 to $1,987.90 an ounce.

On the currency front, the U.S. dollar is trading at 106.24 yen versus the 105.83 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1733 compared to last Friday's $1.1778.

Asia

Asian stocks ended mixed on Monday as upbeat factory activity data was offset by lingering worries about the relentless surge in coronavirus cases around the world and rising U.S.-China tensions.

Chinese shares rallied after survey results from IHS Markit showed the country's manufacturing sector expanded at the fastest pace since early 2011. The Caixin manufacturing Purchasing Managers' Index rose to 52.8 in July from 51.2 in June, as market conditions continued to recover from the coronavirus outbreak.

Supporting the higher PMI figure was a steeper increase in production across Chinese manufacturing firms. Output expanded for the fifth month in a row, and at the fastest rate for nine-and-a-half years, with many companies citing greater client demand.

The benchmark Shanghai Composite Index jumped 57.96 points, or 1.8 percent, to 3,367.97, although Hong Kong's Hang Seng Index fell 137.22 points, or 0.6 percent, to 24,458.13.

Japanese shares posted strong gains to snap a six-day losing streak as the yen retreated from a 4-1/2-month high against the dollar and a survey showed the manufacturing sector in the country contracted at a slower rate in July.

The Nikkei 225 Index surged up 485.38 points, or 2.2 percent, to 22,195.38 after plunging 4.6 percent last week. The broader Topix closed 1 percent higher at 1,522.64, recovering from a two-month low hit on Friday.

Yamato Holdings Co. spiked 5.5 percent after the courier service operator forecast a 43.2 percent jump in operating profit for the fiscal year.

Meanwhile, Keyence Corp. tumbled 3.9 percent after the factory automation equipment maker logged a 21.9 percent decline in its March-June operating profit.

Seven & i Holdings Co. lost 4.8 percent after the retail group agreed to buy U.S. gas stations Speedway from Marathon Petroleum.

Japan's final reading for gross domestic product in the first quarter of 2020 was unrevised, the Cabinet Office said today, showing a 2.2 percent annualized decline and a seasonally adjusted 0.6 percent quarterly contraction. That was unchanged from June's advance reading and was in line with expectations.

Australian markets fluctuated before finishing marginal lower after the reintroduction of lockdown measures in Victoria. The big four banks fell 2-4 percent ahead of the RBA monetary policy meeting on Tuesday, with no changes to policy expected.

Energy companies rose broadly despite oil prices moving lower in Asian trading on fears that impending relaxations in production cuts from OPEC and its allies would result in oversupply.

Gambling and entertainment company Tabcorp Holdings declined 1.7 percent after it warned of A$1.1 billion in impairments.

Miners BHP and Rio Tinto gained 1.6 percent and 1 percent, respectively, while gold miners Evolution Mining and Northern Star Resources climbed about 3 percent.

On the economic front, the latest survey from the Australian Industry Group revealed that the manufacturing sector in Australia continued to expand in July, and at a faster pace, with a seasonally adjusted Performance of Manufacturing Index score of 53.5, up from 51.5 in June.

Seoul stocks recovered from an early slide to end on a flat note amid renewed concerns over the resurgence of Covid-19 infections around the world and the political feud between the United States and China, South Korea's two largest trade partners.

EV battery makers and tech shares bucked the trend to end higher after the latest PMI data signaled a solid improvement in the health of China's manufacturing sector in July. Samsung SDI surged 4.3 percent and internet giant Naver jumped 4.5 percent. LG Chem shares soared 11.8 percent to hit a record high.

The manufacturing sector in South Korea continued to contract in July, albeit at a slower rate, the latest survey from Markit Economics showed with a six-month high manufacturing PMI score of 46.9. That's up from 43.4 in June.

Europe

European shares have moved sharply higher on Monday as upbeat Eurozone, Chinese and U.K. manufacturing data helped ease fears about global economic recovery.

While the German DAX Index has spiked by 2.3 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index are up by 1.4 percent and 1.3 percent, respectively.

In economic news, a private survey showed Chinese factory activity expanded at the fastest pace in a decade in July, helping ease worries about the Covid-19 pandemic's impact on the global economy.

The euro area manufacturing sector returned to growth in July for the first time in a year-and-a-half as output and demand continued to recover with the further easing of restrictions related to the coronavirus, final data from IHS Markit showed.

The manufacturing Purchasing Managers' Index rose to 51.8 in July from 47.4 in June. This was also above the flash reading of 51.1.

U.K. manufacturing activity is also on course for recovery as the nation's lockdown eased and furloughed staff returned to work. The IHS Markit/CIPS manufacturing purchasing managers' index (PMI) rose to 53.3 last month from 50.1 in June.

Roche Holding has advanced as the European Commission approved Rozlytrek for the treatment of adults with ROS1-positive, advanced non-small cell lung cancer.

Sanofi shares have also surged after the U.S. agreed to spend $2.1 billion on a joint experimental Covid-19 vaccine from GlaxoSmithKline and Sanofi.

On the other hand, shares of Heineken have moved sharply lower after the Dutch brewer swung to a loss in the first half. HSBC Holdings shares have also plunged after the bank reported a 65 percent slump in first-half pre-tax profit.

Aerospace supplier Senior Plc has also plummeted after posting a loss in the first half of 2020. Similarly, insurer Hiscox has tumbled after it swung to a first-half loss.

Hammerson has also slumped. The property development and investment company said it was considering a rights issue and was in advanced talks to dispose of its interest in VIA Outlets.

Societe Generale has also moved to the downside after the French lender reported a 1.26 billion euro ($1.48 billion) second quarter loss.

U.S. Economic Reports

At 10 am ET, the Institute for Supply Management is scheduled to release its report on activity in the manufacturing sector in the month of July.

The ISM's purchasing managers index is expected to inch up to 53.6 in July from 52.6 in June, with a reading above 50 indicating growth in manufacturing activity.

The Commerce Department is also due to release its report on construction spending in the month of June at 10 am ET. Economists expect construction spending to drop by 0.5 percent in June after slumping by 2.1 percent in May.

At 12:30 pm ET, St. Louis Federal Reserve President James Bullard is scheduled to speak in a virtual event on the U.S. economy and monetary policy.

Chicago Federal Reserve President Charles Evans is due to speak at a virtual roundtable session with news media at 2 pm ET.

Stocks In Focus

Shares of Varian Medical Systems (VAR) are moving sharply higher in pre-market trading after the cancer treatment company agreed to be acquired by Siemens Healthineers in an all-cash transaction valued at $16.4 billion.

Marathon Petroleum (MPC) is also likely to move to the upside after the energy company agreed to sell its Speedway gas stations to the owners of the 7-Eleven convenience store chain for $21 billion in an all-cash deal.

Shares of DiamondPeak Holdings (DPHC) are also seeing significant pre-market strength on news the special purpose acquisition company will merge with electric truck maker Lordstown Motors. Upon closing, the combined company will remain listed on the Nasdaq under the new ticker symbol "RIDE."

On the other hand, shares of Carnival (CCL) may come under pressure after the cruise operator said it had to cancel the planned short trips on AIDA Cruises while it awaits final approval from the Italian government.

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