By Yasin Ebrahim
Investing.com – The Dow ended off its lows Monday, as investors snapped up beaten-down tech names to push the broader sector into positive, though falling hopes of further fiscal stimulus weighed on investor sentiment.
The Dow Jones Industrial Average fell 1.84%, or 509 points, but had been down over 900 points intraday. The S&P 500 was down 1.13%, while the Nasdaq Composite slipped 0.13%.
A wave of late-buying in Apple (NASDAQ:AAPL) and strength in Microsoft (NASDAQ:MSFT) on deal news sparked a move higher in the broader tech sector, helping the market recover from its lows of the day.
Microsoft ended more than 1% higher after announcing a $7.5 billion deal to buy ZeniMax Media, the parent company of game developer and publisher Bethesda Softworks. The move comes as Microsoft seeks to ramp-up efforts to build its consumer business after failing in its quest to acquire TikTok's U.S. operations.
"With over 15 million subscribers currently on its Game Pass MSFT is doubling down on its consumer endeavors with this acquisition, a smart and strategic move in our opinion heading into its highly anticipated new console release," Wedbush analyst Daniel Ives said.
Tech helped offset weakness in value sectors on fears that a lack of further stimulus could hurt the U.S. economic recovery at a time when a surge in cases across Europe threatens global growth.
Analysts have warned that President Donald Trump's intention to press ahead with the replacement of the late Supreme Court Justice Ruth Bader Ginsburg will all but end the prospect of further stimulus. Democrats have urged Trump to halt plans to appoint a replacement before the November election.
"Trump has said he will announce his pick by Friday or Saturday while seeking a confirmation vote before the November 3rd election … this will result in a further lessening of chances at a US stimulus bill," Scotia Economics said. The move would likely take up "precious time for the executive and calendar space in the Senate before the election at the expense of things like a stimulus bill," the firm added. "Even if quick resolution is achieved, however, the Democrats’ spirit of cooperation is likely to be further lessened as total election gridlock takes root."
As well as concerns over stimulus, rising U.S.-China tensions also weighed on investor sentiment as Beijing is reportedly readying a list of U.S. companies to blacklist, The Wall Street Journal reported. The move comes in the wake of Trump's ultimatum for a U.S. company to take over video-sharing app TikTok. Trump said he approved Oracle (NYSE:ORCL)'s proposal to take a partial stake in TikTok.
In other news, Nikola (NASDAQ:NKLA) slumped 19% after its founder, Trevor Milton, stepped down and was replaced by former General Motors (NYSE:GM) executive Stephen Girsky.
Cloud company Snowflake, which more than doubled on its market debut last week, fell 3% after Summit Insights Group issued a sell rating on the stock, and warned of a "violent sell-off."