Stocks drift on Wall Street; S&P 500 within 1% of record

Wall Street is drifting close to its record heights on Monday after President Donald Trump announced several stopgap moves to aid the economy, following the collapse of talks on Capitol Hill for a bigger rescue package.

The S&P 500 was up 0.2% in afternoon trading after flipping from small gains to losses during the morning. It's the first trading since Trump signed executive orders over the weekend to extend an expired benefit for unemployed workers, among other things. The orders were more limited than what investors hoped to see from a full rescue bill for the economy, but hopes remain that the White House and Congress can return to talks and find a compromise.

The Dow Jones Industrial Average was up 288 points, or 1.1% at 27,721, as of 2:13 p.m. Eastern time, and the Nasdaq composite was down 0.5%.

Most stocks in the S&P 500 and across Wall Street were higher, led by hotels, cruise operators and airlines. Smaller stocks were also doing better than the rest of the market, with the Russell 2000 index of small-cap stocks up 1.2%.

“The more economically sensitive stocks are driving the market higher,” said Brent Schutte, chief investment strategist of Northwestern Mutual Wealth Management. “The rest of the market today and over the past few days is doing better.”

MGM Resorts International jumped 12.6% for the biggest gain in the S&P 500 after IAC disclosed that it had built a roughly $1 billion stake in the company. Like other businesses that depend on people feeling safe enough to travel, MGM Resorts has been pummeled by the pandemic, and its shares more than halved in March alone. Barry Diller, IAC’s chairman, called it a “once in a decade” opportunity, citing its potential to move business online.

But losses for technology stocks were weighing on the market. It's a continuation of their struggles from Friday, when worries rose that worsening U.S.-China relations could mean retaliations against the U.S. tech industry. It's a relatively rare setback for the industry, which has been the year’s biggest winners so far and cruised through much of the pandemic. Critics had already been calling tech stocks overpriced, even after accounting for their huge and resilient profits.

If stocks end the day higher, it would extend the S&P 500’s wining streak to seven days, which would be its longest since the spring of 2019. The rally had carried the S&P 500 all the way back to within 1% of its record, which was set before the pandemic pancaked the economy into recession. It had been down nearly 34% in March.

Investors have been saying the economy needs another big lifeline from Washington, and quickly, after $600 in weekly unemployment benefits for workers from the federal government expired with July's end. But talks broke apart on Friday, and Trump issued his executive orders on Saturday. Both the White House and congressional Democrats indicated Sunday they wanted to resume negotiations, but no talks were scheduled.

Almost immediately after Trump signed the orders, critics said the moves did not go far enough to support the economy and questioned how they would work.

The economy has shown some signs of improvement since the spring but it is still struggling. Friday's jobs report showed a larger-than-expected increase in hiring across the economy during July, but also a slowdown in job growth amid worries that a resurgence in coronavirus counts could force the economy to backtrack.

The impasse on Capitol Hill is just one of several big forces pushing on markets, not even including the rising number of coronavirus counts around the world.

Rising toward the top of the list in recent weeks has been growing antagonism between the United States and China, the world’s largest economies. The latest move in their escalating tensions was China’s announcement of unspecified sanctions against 11 U.S. politicians and heads of organizations promoting democratic causes, including Senators Marco Rubio and Ted Cruz.

The two sides are scheduled to hold trade talks at the end of the week.

Chinese stocks rose earlier in the morning, along with many other markets around the world.

Stocks in Shanghai climbed 0.8%, and South Korea's Kospi added 1.5%. The Hang Seng in Hong Kong, though, dipped 0.6% after the authorities arrested pro-democracy media tycoon Jimmy Lai and some of his associates on suspicion of collusion with foreign powers.

In Europe, Germany's DAX returned 0.1%, and France's CAC 40 gained 0.4%. The FTSE 100 in London added 0.3%.

The yield on the 10-year Treasury rose to 0.57% from 0.56% late Friday.

Benchmark U.S. crude oil gained 2.2% to $42.13 per barrel. Brent crude, the international standard for pricing, added 1.7% to $45.17 per barrel.

Gold added 0.6% to $2,041 per ounce.

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AP Economics Writer Paul Wiseman and AP Business Writer Elaine Kurtenbach contributed.