By Geoffrey Smith
Investing.com -- U.S. stock markets opened higher on Monday, as the feeding frenzy in tech stocks pushed the Nasdaq Composite to yet another record high, despite continuing signs that the coronavirus pandemic threatens to lurch completely out of control in the U.S.
By 9:40 AM ET (1340 GMT), the NASDAQ Composite was up 1.2% at 10,745 points. The Dow Jones Industrial Average and S&P 500 were both up 0.8%, the Dow posting a gain of 208 points to 26,279.
Tesla (NASDAQ:TSLA) stock - again - was at the center of some of the most intense buying, rising 11.3% to another new record on speculation that another quarter of profitability will see it included in the S&P 500, forcing all the passively-managed funds benchmarked to the index into buying it. S&P regularly rebalances its index, and Tesla is clearly the biggest stock in the U.S. not included in it, but four straight quarters of profits is only one of many criteria the index provider insists on.
Tesla has now rallied 83% in the last month alone, mainly on the back of such speculation, which is taking place increasingly through the options market. However, the company is still having to discount sharply to shift inventory: it announced a 6% cut in the price of its new Model Y crossover at the weekend, only three months after debuting the model.
Elsewhere, Maxim Integrated Products (NASDAQ:MXIM) stock rose 13.4% to a new record higher after agreeing to be bought by Analog Devices (NASDAQ:ADI), a rival maker of semiconductors, in a deal that values the combined company at around $70 billion.
United Airlines (NASDAQ:UAL) stock fell 5.0% and American Airlines (NASDAQ:AAL) stock fell 2.9% as a succession of negative headlines about the pandemic dented hopes for a quick recovery in air travel. The U.S. posted over 60,000 new cases for the third straight day on Sunday, according to Johns Hopkins data.
The broader market was underpinned ahead of the upcoming earnings season by a note from Goldman Sachs (NYSE:GS) in which the investment bank raised its full-year earnings estimate for S&P 500 stocks by just under 5%. However, it cautioned that outlooks would be more important than historical earnings figures through June - a period that the market has already tried to write off in its memory.
The first major U.S. company to report - PepsiCo (NASDAQ:PEP),- delivered earnings that were slightly ahead of forecasts but pointedly declined to give a financial outlook for the rest of the year, citing pandemic-related uncertainty. It still promised $7.5 billion of shareholder payouts this year, of which $2 billion would be in the form of share buybacks - but didn't indicate whether or how much it would have to borrow to do this.
Elsewhere, U.S. crude oil futures drifted 1.0% lower on the prospect of OPEC and its allies loosening their output restraint pact. Shale producer Parsley Energy 's (NYSE:PE) stock fell 3.5% after CEO Matt Gallagher he thought U.S. oil output may never recover its pre-pandemic levels.