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US close: Solid gains on the Street following manufacturing PMIs

By Iain Gilbert

Date: Monday 03 Aug 2020

US close: Solid gains on the Street following manufacturing PMIs

(Sharecast News) - Wall Street stocks closed higher on Monday as market participants turned their attention towards stimulus talks in Washington and a reading of July's purchasing manager index.
At the close, the Dow Jones Industrial Average was up 0.89% at 26,664.40, while the S&P 500 was 0.72% firmer at 3,294.61 and the Nasdaq Composite saw out the session 1.47% stronger at 10,902.80.

The Dow closed 236.08 points higher on Monday, carrying on with gains recorded at the end of the previous session after Apple, Amazon and Facebook all posted far-better-than-expected quarterly financial results the evening before.

Monday's main focus was talks between Republican and Democratic lawmakers on Capitol Hill as discussions reached an impasse over certain components of the nation's next Covid-19 relief bill. The key issue between the two parties was over the amount of a federal boost to unemployment assistance, which was set at $600 per week in March but had just expired during the previous week.

While the White House has indicated desires to reduce the federal assistance to just $200 a week, Democrats were backing a move to keep the $600 payments in place. Other provisions, such as another round of $1,200 stimulus checks, had broader support from both sides of the aisle.

Elsewhere, while a dollar bounce took somewhat of an edge off a recent surge in gold prices, it still saw fit to take another run at $2,000 early on Monday.

In corporate news, Eli Lilly shares closed higher 2.19% after revealing it had begun phase three trials of a drug aimed at preventing coronavirus, while Clorox shares were down despite posting a strong quarterly earnings report.

Shares in home security firm ADT skyrocketed after revealing Google parent company Alphabet had taken up a 6.6% stake in the group, while Microsoft shares gained after confirming reports that it was in talks to purchase social video app TikTok.

On the macro front, the IHS Markit US manufacturing PMI for July was revised lower to 50.9 on Monday from a preliminary estimate of 51.3.

However, the latest figure was still seen as signalling a marginal improvement in the performance of the US manufacturing sector as it was the first increase in the index since February.

On the other hand, according to the Institute for Supply Management, economic activity in the US' manufacturing sector expanded at a stronger pace in July than in the prior month, with the ISM's manufacturing PMI improving from 52.6 to 54.2 - ahead of expectations for a reading of 53.6.

Lastly, construction spending recorded a fourth straight decline in June as the Covid-19 pandemic continued to wreak havoc on the US economy. Spending on construction projects fell 0.7% in June, with both home building and non-residential activity declining, according to the Commerce Department.

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