U.S. and Canadian stocks ended higher on Monday as increases in large tech and internet companies and oil price gains outweighed concerns sparked by fresh U.S.-China tensions and downbeat sentiment from the annual meeting of Warren Buffett’s Berkshire Hathaway.
Major U.S. indexes opened lower but moved higher throughout the afternoon to snap two-day losing streaks. The S&P/TSX Composite Index moved largely in lockstep, closing up 124.70 points, or 0.85%, at 14,745.04. The TSX tech sector led gains, rising 3.61% as Shopify rose 7.63%. The materials sector rose 2%, and energy 0.21%.
Stocks have rebounded sharply since late March from the coronavirus-fueled sell-off, helped by massive monetary and fiscal stimulus. Investors are now focused on the impact from a number of states, provinces and countries easing restrictions designed to stop the outbreak in order to aid their economies.
New York Governor Andrew Cuomo on Monday outlined a phased reopening of business activity in the state hardest hit by the COVID-19 pandemic.
“Can you lift restrictions and begin to phase in economic activity and yet keep the number of cases at bay? That is what the market is focused on right now,” said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.
The Dow Jones Industrial Average rose 26.07 points, or 0.11%, to 23,749.76, the S&P 500 gained 12.03 points, or 0.42%, to 2,842.74 and the Nasdaq Composite added 105.77 points, or 1.23%, to 8,710.72.
Gains in Microsoft, Apple and Amazon were the biggest lifts for the S&P 500, following mixed reaction last week to reports from big tech names.
Energy was the best performing S&P 500 sector, rising 3.7%, as oil prices gained. By late afternoon, U.S crude was up 8 per cent at US$21.37 a barrel.
Shares of Delta Air Lines Inc, American Airlines Group Inc, Southwest Airlines Co and United Airlines Holdings Inc fell between 5% and 8% and were among the biggest decliners on the S&P 500 after a move by Berkshire Hathaway to dump stakes in major U.S. airlines. Air Canada, which disclosed a C$1-billion loss in the first quarter, lost 8.65%.
Shares of Berkshire itself fell 2.6% and weighed on the S&P 500 after the conglomerate posted a record quarterly net loss of nearly $50 billion.
Buffett, whose comments are closely followed by investors, acknowledged at Berkshire’s annual meeting on Saturday that the global pandemic could significantly damage the economy and his investments.
“His narrative was relatively sober compared to his posture over the years,” said Emily Roland, co-chief investment strategist at John Hancock Investment Management.
A flare-up in U.S.-China tensions presents another challenge to the market. Secretary of State Mike Pompeo said on Sunday there was “a significant amount of evidence” that the new coronavirus emerged from a Chinese laboratory. An editorial in China’s Global Times said he was “bluffing.”
Investors are also digesting a difficult corporate results season. With more than half of S&P 500 companies reporting results so far, first-quarter earnings are expected to have fallen 12.5%, according to Refinitiv data.
Shares of Tyson Foods Inc tumbled 7.8% after the company said the coronavirus crisis will continue to idle U.S. meat plants and slow production as it reported lower-than-expected earnings and revenue for the quarter.
Data on Monday showed new orders for U.S.-made goods suffered a record decline in March and could sink further as disruptions from the coronavirus fracture supply chains and depress exports.
Read more: Market movers: Stocks that saw action on Monday - and why
Reuters
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