U.S. Stocks Start Week With Gains

U.S. stocks rose Monday as investors bet that the largest technology firms will power ahead in an uncertain economic environment.

Amazon.com, Google parent Alphabet and Apple led the major indexes higher, extending a rise that has helped make the tech sector the best performing in the S&P 500 index so far this year.

The broad stock market index rose 0.6% in afternoon trading, while the Dow Jones Industrial Average climbed 0.3%. The technology-focused Nasdaq Composite Index was up 1.6%.

The big technology companies are due to report quarterly earnings later this week. The firms have weathered the recent recession better than many other sectors of the economy, and some investors say they believe their stocks are poised to outperform after a retreat in recent days.

"The setup is better than it would have been if all these tech stocks were sitting at record highs going into earnings," said Jason Ware, partner and chief investment officer at Albion Financial Group in Salt Lake City, Utah.

Amazon shares ticked up 1.8% Monday, extending their gains for the year to 66%. Alphabet rose 1.5%, and Apple added 2.2%.

Rising coronavirus infections around the world tempered the gains in the stock market and helped push gold prices to a fresh record. Futures contracts for delivering gold in August shot up 1.8% to $1,931 a troy ounce, topping the previous intraday high of $1,923.70 in September 2011.

The advance extends a summer surge for the precious metal, which has benefited from a cautious outlook for the global economy, a broad decline in interest rates and the weakening dollar. Silver jumped 7.3%.

The U.S. dollar fell as investors bet that the Federal Reserve will continue to keep the spigot turned on for cheap money and backstop the U.S. economy. The WSJ Dollar Index, which measures the U.S. dollar against a basket of currencies, fell 0.6%, on pace to close at its lowest level since February 2019. The central bank is set to hold its regular meeting this week.

"There's some optimism that the Fed's likely message of 'lower for longer' might be a positive one this week," said Seema Shah, chief strategist at Principal Global Investors. "But investors remain cautious about the U.S."

Real yields, which reflect the value of bond yields after adjusting for inflation expectations, have plunged around the world as central banks slashed interest rates and unleashed stimulus to address the economic hit from the coronavirus pandemic.

The real yield on U.S. Treasurys has dropped to 2012 levels, which is driving a selloff in the dollar, according to Derek Halpenny, head of research at MUFG Bank.

"At the moment, there's quite compelling evidence that the economy is flatlining," said Mr. Halpenny. "Gold is your best form of protection as an investor, as long as real yields continue to fall lower."

The yield on the 10-year U.S. Treasury note ticked up to 0.605%, from 0.589% Friday.

In addition to earnings reports from some of the world's biggest companies, investors are monitoring developments on a highly anticipated U.S. stimulus package.

Republicans are set to release Monday their proposal for the next coronavirus relief bill, which will kick off a round of negotiations with Democrats as millions of Americans are on the verge of losing expanded unemployment benefits. Lawmakers now have little time before the $600 weekly supplement to jobless benefits ends.

Meanwhile, the latest economic data showed orders for durable goods jumped by 7.3% in June from a month earlier, the second consecutive monthly gain. Economists polled by The Wall Street Journal expected a 5.4% rise.

Investors' concerns about the global outlook have been exacerbated by the rise in new coronavirus cases across the U.S. and other parts of the world. The number of infections climbed over the weekend to surpass 16 million globally, and American officials urged residents to comply with orders meant to slow the virus's spread.

Shares of Moderna rose 9.9% after the company said it had received additional funding from the federal government's effort to accelerate development of a vaccine for Covid-19.

In commodities markets, the U.S. crude oil benchmark rose 0.8%.

Overseas, stocks were mixed. The pan-continental Stoxx Europe 600 benchmark dropped 0.3% as worries about recent outbreaks of the virus in Spain and the implications for the travel industry weighed on sentiment, analysts said.

China's main stocks benchmark, the Shanghai Composite Index, closed up 0.3%. The equity gauge in Hong Kong ticked down 0.4%, while Japan's Nikkei 225 eased 0.2% lower.

Write to Anna Isaac at anna.isaac@wsj.com and Ben Eisen at ben.eisen@wsj.com

  (END) Dow Jones Newswires
  07-27-20 1529ET
  Copyright (c) 2020 Dow Jones & Company, Inc.

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