What’s happening: US stocks delivered gains on Tuesday, settling near the previous record highs.
What happened: September has historically been a weak month for stocks markets. In fact, this has been the worst performing month since 1950, according to LPL Financial.
Despite this, investor sentiment remains positive, which helped Wall Street bag the best August performance in more than 30 years. September has now begun on a positive note, supported by upbeat economic releases.
Why it matters: Companies putting up a strong performance over the last few months are looking to extend their rally in September. Investors have been adding large-cap and tech stocks to their portfolios since the beginning of the covid-19 impact on markets in March.
Stocks started the session on a choppy note on the first trading day of September but soon picked up momentum, following Federal Reserve Governor Lael Brainard’s comments around the need for the central bank to provide further support to the US economy.
Strong economic releases lifted sentiment, with the ISM manufacturing index climbing to 56 in August, from 54.2 in July. The IHS Markit report also showed manufacturing PMI increasing to 53.1 in August.
PMIs outside the US have also held up. Eurozone’s manufacturing PMI signaled improving conditions in August, while China’s Caixin PMI surged to multi-year highs.
Shares of Apple, Amazon, Walmart and Facebook recorded sharp gains on the first trading day of September. Eastman Kodak’s stock jumped 22% after DE Shaw & Co acquired a 5.2% stake in the company. Shares of Zoom Video Communications surged more than 40% on Tuesday, after the company reported stronger-than-expected quarterly results.
The Dow Jones index climbed 215.61 points to close at 28,645.66 on Tuesday, while the S&P 500 rose 0.8% to reach 3,526.65, after rising as high as 3,528.03 earlier in the session.
The Nasdaq 100 added 165.21 points to hit a record close of 11,939.67, after reaching a new intraday high of 11,945.72.
What to watch: Investors await reports on ADP employment, ISM New York index and factory orders from the US. Factory orders, which increased 6.2% in June, are expected to rise 6% in July. Private businesses in the US are expected to hire 950,000 workers in August, versus an addition of 167,000 jobs in July. The Federal Reserve is also scheduled to release its Beige Book report today.
Markets will continue to monitor the covid-19 numbers, with total cases surging past 6 million in the US.