By Yasin Ebrahim
Investing.com – The S&P and Nasdaq made a positive start to the week on Monday, closing at record highs as strong gains for mega-cap tech stocks overshadowed concerns about the coronavirus impact.
The S&P 500 rose 0.7%, Nasdaq Composite added 1.1% and the Dow Jones Industrial Average gained 0.55%.
The World Health Organization’s Dr. Sylvia Briand told reporters the coronavirus produces mild cold symptoms in about 80% of the cases seen so far, with just 15% of those infected ending up with pneumonia and 3% to 5% of patients needing intensive care.
The world health watchdog did expressed concerns, however, about new cases of the virus emerging outside mainland China, which it warned could be a "spark that becomes a bigger fire."
Recent economic data, including the better-than-expected U.S. jobs report last week, has underpinned investor hopes that the economy would be able to withstand the fallout from the virus, with some betting that central banks will act in the event of a prolonged outbreak.
"We expect the novel coronavirus to have a negative impact on the overall Chinese economy, and, potentially slowing China's GDP growth by 100-to-200 basis points in the first quarter of the year," DA Davidson said.
But "based on the SARS impact in 2003, we believe that economic growth will rebound rapidly, after the nCoV outbreak is contained," the firm added.
The virus outbreak aside, tech stocks reigned on Wall Street, with Nvidia, in particular, rallying ahead of its earnings due Thursday.
Nvidia (NASDAQ:NVDA) jumped 4.5%, buoyed by a price upgrade from RBC to $301 From $258.
"We raise our estimates on NVDA as we think the January quarter will come in a bit ahead of the high-end of guide due to better than expected gaming and data center demand," RBC said in a note.
A rise in consumer discretionary, led by Amazon (NASDAQ:AMZN) and L Brands (NYSE:LB), also played a role in a broad-based move higher.
L Brands closed more than 2% higher as the company is reportedly nearing a deal to sell Victoria's Secret to private equity company Sycamore Partners.
Elsewhere, Tesla (NASDAQ:TSLA) pared some gains, but ended the day 3% higher after the electric automaker restarted production at its China factory after operations were disrupted by the coronavirus outbreak.
Slack Technologies (NYSE:WORK) jumped 15.6% on a report that IBM is switching to its workplace messaging and communications software. The stock gave back some gains post-market after the company downplayed the report, leaving its guidance for the fiscal fourth quarter unchanged.
Slack also clarified that IBM (NYSE:IBM) has been its largest customer for several years and has expanded its usage of the messaging platform over that time.
Energy stocks proved an exception to the rally not least because oil prices continued to decline on concerns about the impact of the coronavirus on Chinese oil demand.