US stocks post solid gains as technology shares lead rally

US stocks post solid gains as technology shares lead rally

Sunday, September 27, 2020

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STOCKS shook off another bout of volatile trading and finished solidly higher on Friday last, led by gains in technology and health care companies. Despite the rally, the S&P 500 still posted its fourth-straight weekly loss, extending Wall Street's September swoon.

The S&P 500 rose 1.6 per cent after flip-flopping between small gains and losses a few times in the early going. Stocks have been erratic this month, with indexes setting new highs to start the month and then falling sharply as investors worried that values for some of technology giants had risen too high.

The benchmark index ended the week with a 0.6 per cent loss for its first four-week losing streak in more than a year. The index is now down 5.8 per cent for September, following five straight months of gains.

The S&P 500 came within striking distance of a 10 per cent drop from its all-time high earlier this eek, what Wall Street calls a correction.

Big tech stocks recovered from an early slide – Apple gained 3.8 per cent, Microsoft rose 2.3 per cent and Google's parent company added 1.1 per cent.

Traders also bid up shares in cruise lines. Norwegian Cruise Line notched the biggest gain in the S&P 500, vaulting 13.7 per cent. Carnival jumped 9.7 per cent and Royal Caribbean Group climbed 7.7 per cent.

Recently, investors' frustration has also grown with the inability of Congress to deliver more aid to the economy after weekly unemployment benefits and other stimulus expired.

Democrats in the House of Representatives are paring back their proposal for stimulus in hopes of jumpstarting talks with the White House, but investors are sceptical whether or not something can happen soon. Deep partisan divisions have kept Congress from acting, and tensions are on the rise due to the sudden vacancy on the Supreme Court following the death of Justice Ruth Bader Ginsburg.

Yet another report on Friday suggested that the economy's recovery is slowing without the support from Capitol Hill. Growth for US orders of machinery and other long-lasting goods was just 0.4 per cent last month, down from 11.7 per cent in July. The figure on durable goods was much weaker than economists had forecast, though several said they saw a mixed picture underneath the headline numbers.

Among other concerns for markets are rising tensions between the United States and China and the possibility that investors' expectations for a COVID-19 vaccine arriving early next year may prove to be too optimistic.

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