Wall Street rises on strong services sector, hopes of China recovery

(Reuters) – Wall Street’s major indexes were up more than 1% on Monday as data showing unexpected growth in the U.S. services sector last month and a revival in China’s economy boosted optimism, helping investors look past a surge in new coronavirus cases at home.

The ISM’s non-manufacturing activity index jumped to 57.1 in June, almost returning to pre-pandemic levels, but a recent surge in COVID-19 cases in the United States has threatened the emerging recovery.

“These numbers are important, and it helps to explain the increase in consumer confidence,” said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.

Investors also bet on an improving Chinese economy and its impact on the global growth as the yuan led commodity currencies higher against the dollar. Earlier, Chinese stocks jumped more than 5%.

A slew of upbeat U.S. data, including a record rise in monthly payrolls, has powered the Nasdaq to all-time highs and has helped the S&P 500 and the Dow shed much of their losses. The S&P 500 is roughly 6% below its February peak, while the Dow is about 11% below its record high from that month.

The S&P 500 rose for the fifth day, undeterred by a record surge in new COVID-19 cases in 16 states in the United States this month that could further hamper reopening plans and poses a big risk to the economic recovery.

The Dow Jones Industrial Average rose 368 points, or 1.42%, to 26,195.36, the S&P 500 gained 41.93 points, or 1.34%, to 3,171.94 and the Nasdaq Composite added 197.03 points, or 1.93%, to 10,404.66.

Over the Independence Day weekend, several states reported a record increase in new infections, with Florida surpassing the highest daily tally reported by any European country during the peak of the outbreak there.

Online retail giant Amazon.com crossed $3,000 for the first time and was the top support to the benchmark index and the Nasdaq.

Tesla Inc were up about 10%, rising for the fifth session as JPMorgan bumped up its price target for the electric carmaker’s stock following better-than-expected quarterly deliveries.

Uber Technologies Inc climbed 5.1% after the ride-sharing company agreed to buy food-delivery app Postmates Inc in a $2.65-billion all-stock deal.

Advancing issues outnumbered declining ones on the NYSE by a 2.21-to-1 ratio; on Nasdaq, a 1.74-to-1 ratio favored advancers.

The S&P 500 posted 38 new 52-week highs and no new lows; the Nasdaq Composite recorded 145 new highs and 14 new lows.

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