By Anna Hirtenstein 

U.S. stocks ticked up Tuesday as tech shares continued to climb in the wake of a flurry of M&A activity in the sector.

The S&P 500 advanced 0.8%, while the Dow Jones Industrial Average added 0.7%. The Nasdaq Composite Index rose 1.2%, pointing to another day of gains for technology stocks.

A wave of multibillion-dollar deals emerging earlier this week from well-known tech companies could boost stock benchmarks for a second day, underscoring the outsized role of a handful of giant firms in U.S. equity markets.

"There's been exuberance in the tech sector and valuations are high, but M&A means some people think there's still some assets that aren't overvalued, they may actually be undervalued," said Ludovic Subran, chief economist at Allianz. "M&A can be perceived as a sign of undervaluation" and some people will be buying.

Tech stocks continued to climb in premarket trading, extending Monday's rally. Apple rose 2.9% and Tesla added 4.1%. Nvidia shares advanced 3.1% after it said earlier this week it would acquire chip designer Arm Holdings from SoftBank.

Industrial production figures for August rose 0.4% in August, marking a slowdown in the pace of the recovery compared to the previous month, as retightened restrictions in some states affected demand. They were lower than economists' estimates.

Earlier Tuesday, key economic statistics showed that China's economic recovery accelerated in August. Retail sales in the Asian nation returned to pre-coronavirus levels with their first month of growth this year. Other major indicators, including factory production, investment and property activity, all gathered pace, signaling a strong rebound for the world's second-largest economy.

"It paints a fairly robust picture of the Chinese economy," said Sebastien Galy, a macro strategist at Nordea Asset Management. "It's a solid positive surprise, but the data tells you more about the message the Chinese government wants to give you."

The Shanghai Composite Index closed up 0.5%, and Hong Kong's Hang Seng Index rose 0.4%. The yuan strengthened 0.5% against the dollar in offshore trading, climbing to the highest level since May 2019.

The pan-continental Stoxx Europe 600 rose 0.7% from an anticipated boost in Chinese demand for European goods. The U.K.'s FTSE 100 index climbed 1.1%, led by mining shares. Glencore added 3.4%, BHP Group was up 2.4% and Anglo American rose 2.6%.

In the U.S., "a lot of people will be looking to industrial production to see if the economic recovery is picking up," Mr. Galy said. "I wouldn't be surprised if we also see good numbers there, there's a lot of pent-up demand in the U.S."

Gold rose 0.7% to $1,977.40 a troy ounce, the highest level in nearly a month. The yield on 10-year U.S. Treasury bonds ticked up to 0.682%, from 0.669% on Monday.

Among European equities, Sweden's H&M Hennes & Mauritz jumped 11.6% after the fashion retailer's third-quarter preliminary pretax profit beat analysts' estimates.

Fiat Chrysler Automobiles climbed nearly 11% after the car maker changed the terms of its merger with PSA Group to preserve cash. Fiat Chrysler will pay a cash dividend of EUR2.9 billion, equivalent to $3.44 billion, to shareholders, down from the previously agreed EUR5.5 billion. PSA, which owns the Peugeot and Citro├źn brands, agreed to distribute its $3.2-billion stake in car parts supplier Faurencia to shareholders, instead of selling it.

In U.S. premarket trading, NextEra Energy rose 7.1% after the utility raised its outlook for next year and announced a stock split.

Later in the day, FedEx will report quarterly earnings after markets close. The global shipping company is considered an economic bellwether, as its revenue growth may indicate higher levels of business activity.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com

 

(END) Dow Jones Newswires

September 15, 2020 09:46 ET (13:46 GMT)

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