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Fred Imbert

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Stocks rose on Monday, the first trading day of August, as Wall Street tried to build on its four-month winning streak.

The Dow Jones Industrial Average traded 203 points higher, or 0.8%. The Nasdaq Composite jumped 1.3% to an all-time high. The S&P 500 gained 0.7%.

Monday’s gains were driven by several factors:

Tech shares continued their outperformance relative to the rest of the market, with Apple rising 2.7%. Netflix and Microsoft also traded higher. These stocks are all up sharply for 2020 while the S&P 500 is up just 1.7% in that time period.
Microsoft gained more than 3% after confirming reports about being in talks to buy social video app TikTok in the U.S. The talks come even as President Donald Trump threatens to ban TikTok because of security concerns over its parent company’s ties to China.
Eli Lilly gained 1.4% after announcing the start of a phase 3 trial of LY-CoV555, an experimental coronavirus antibody treatment that may prevent the virus spreading among U.S. nursing home staffers and residents.
Stocks got a boost from better-than-expected manufacturing data. The Institute for Supply Management’s manufacturing PMI rose to 54.2 in July, topping a Dow Jones estimate of 53.8.
Investors also cheered an earnings season in which companies are beating estimates at a record rate. Data compiled by FactSet showed that, through Friday, 84% of S&P 500 companies have beaten earnings expectations. If beat rate stays at that level, it will be the highest since FactSet started tracking the metric in 2008.

The major averages were coming off their fourth consecutive monthly gain in July, with the S&P 500 rising 5.5% and the Nasdaq jumping more than 6% in that time period. The Dow gained 2.4% last month.

To be sure, investor attention has also turned to Washington as Covid-19 stimulus negotiations continue.

“Increased unemployment claims and decreasing consumer confidence show some deterioration of the U.S. consumer backdrop,” wrote Dennis DeBusschere, market strategist at Evercore ISI.

“If an agreement to extend unemployment support passes soon, the nascent Cyclical/risk-on rally from earlier in July can continue,” he added. “Until then, risk-on factors will face headwinds despite the sharp decline in COVID net hospitalizations.”

Republican and Democratic lawmakers remain at a standstill over some components of the next coronavirus relief legislation.

The key debate that separates the two parties is the federal boost to unemployment assistance, which was set at $600 per week in March but recently expired. While the White House has come out in favor of reducing the federal assistance to $200 a week, Democrats have called for keeping it at the $600 level.

Other provisions, such as another round of $1,200 stimulus checks, have broader support from both political parties.

Traders and economists alike are also eager for the July jobs report, which the Labor Department is scheduled to release on Friday.

The once-a-month jobs update will be of critical importance this month, especially since the number of people filing for unemployment benefits has been edging higher. According to Refinitiv, about 1.36 million new jobs are expected, well below the 4.8 million added in June, and the unemployment rate is expected to fall to 10.7% from 11.1%.

Still, market moves around the release could be mixed given the disparity in forecasts. Some economists expect more than 2 million jobs were added, and some even see flat or negative payrolls.

Author: Fred Imbert and Thomas Franck

Source: CNBC: Dow rises 200 points, Nasdaq climbs to record led by Apple and Microsoft

Check out the companies making headlines before the bell:

Intersect ENT (XENT), Medtronic (MDT) — Shares of Intersect ENT popped 35% after Bloomberg News reported Medtronic has made an offer to acquire the California-based medical device company. Though talks are still in their early stages, Intersect’s board is reviewing the offer, according to the report.

National General (NGHC), Allstate (ALL) — National General shares surged more than 67% on news the company would be acquired by insurance giant Allstate. The deal, which is expected to close early next year, is worth $4 billion, or $34.50 per share, in cash. Allstate shares fell 2.5%.

Nikola (NKLA) — An analyst at JPMorgan upgraded the electric truck maker to “overweight” from “neutral,” noting the stock is “starting to look attractive for long-term investors in view of a number of potential positive catalysts in coming weeks and months.” Nikola shares rose more than 7% in the premarket.

Apple (AAPL) — Deutsche Bank hiked its price target on Apple to $400 per share from $380 per share, implying a 7.3% upside from Tuesday’s close of $372.69. “Overall, we feel comfortable that AAPL should continue to offer upside for investors,” a Deutsche Bank analyst said in a note. However, the analyst noted the stock’s recently sharp run-up “has us nervous.”

Biogen (BIIB) — Biogen shares jumped nearly 7% after the company submitted an application to the Food and Drug Administration for aducanumab as a treatment for Alzheimer’s disease. “If approved, aducanumab would be the first treatment with the potential to meaningfully change the course of Alzheimer’s disease,” Biogen said in a release.

Altria (MO) — Shares of the tobacco giant were downgraded to “equal weight” from “overweight” by a Barclays analyst. The analyst noted Altria is “100% U.S.-exposed and continues to lose market share.”

Caterpillar (CAT) — A Bank of America analyst upgraded the construction giant to “neutral” from “underperform,” and hiked its price target on the stock to $135 per share. “We still have our doubts on the sustainability of macro improvement, but are tempering our negativity,” the analyst said. Caterpillar climbed 1.1% before the bell.

American Express (AXP) — American Express was downgraded to “neutral” from “buy” by an analyst at Citigroup, citing the potential for “top line headwinds” moving forward. The analyst also trimmed his price target on the company to $105 per share from $110 per share. American Express shares slid 0.6% in the premarket.

Author: Fred Imbert

Source: CNBC: Stocks making the biggest moves premarket: Nikola, Apple, Biogen, Intersect ENT & more

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