By Yasin Ebrahim
Investing.com – Wall Street surged on Monday as investors continued to back mega-cap tech stocks as better-than-expected economic data suggested the recovery remains on track despite an ongoing increase in Covid-19 cases nationwide.
The S&P 500 gained 1.77%, the Nasdaq Composite added 1.76% and the Dow Jones Industrial Average rose 1.30%.
Florida and Texas reported new single-day records for infections over the weekend, as coronavirus outbreaks across pockets of the U.S. showed little sign of abating.
Infections now total nearly three million nationwide, with 132,000 dead.
The surge in cases comes as data showed the U.S. services sector, which is responsible for the bulk of economic growth, rebounded strongly last month, renewing investor expectations for a sharp economic rebound.
The Institute for Supply Management’s (ISM) non-manufacturing purchasing managers’ index (PMI) jumped to 57.1 in June from 45.4 in May.
"With broad-based reopening and a very low bar set by the readings of the past two months, we saw a very solid rebound this month to 57.1, the strongest reading since February 2020 (57.3)," Jefferies (NYSE:JEF) said.
Tech was among the biggest gainers, with FAANG stocks driving the move higher, led by Amazon (NASDAQ:AMZN) and Netflix.
Netflix (NASDAQ:NFLX) rose more than 3% even as Imperial Capital downgraded the streaming stock to inline from outperform on worries there is "modest" room for upside given the stocks surge in recent months.
Amazon.com (NASDAQ:AMZN) gained 3% and topped $3,000 for the first time ahead of the quarterly earnings season, which starts in earnest next week.
Energy led the gains for the broader market, underpinned by rising oil prices even as some warn that rising cases threatened the recovery seen in crude oil demand.
"We believe that oil-market participants are focusing on the current demand trends but are still ignoring the long-term implications of the corona pandemic," Commerzbank said.
On the M&A front, Uber Technologies (NYSE:UBER) tabled a $2.65 billion shares-only offer to acquire Postmates, the fourth largest food delivery services company, to beef up its UberEATS business.
Elsewhere, Tesla (NASDAQ:TSLA) surged to another all-time high, up 10%, just a week after its second-quarter deliveries topped estimates.