Stock Market Today: The Dow Heats Up as Tech Tones It Down

A rotation from red-hot Big Tech into more battered cyclical sectors fueled a big gain for the Dow on Monday.

Mixed trading continued on Wall Street to start the week, following new actions on federal stimulus over the weekend and another shot to U.S.-China relations on Monday.

President Donald Trump announced several executive orders on Saturday, as Congress dithered on a new stimulus bill, that would temporarily halt payroll-tax collections and partially extend "bonus" jobless benefits that expired in June. However, politicians and analysts alike questioned how much effect each EO could have on its intended goal, not to mention whether they would stand up to likely forthcoming legal challenges.

Also Monday, China ratcheted up tensions even further by sanctioning nearly a dozen American politicians in retaliation for similar U.S. actions in Hong Kong.

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But perhaps the day's most important development was the continuing rebound by beaten-down cyclical stocks, in contrast to many declining large-cap tech stocks whose gains have driven the Nasdaq Composite to considerable outperformance in 2020.

The Dow Jones Industrial Average closed 1.3% higher to 27,791.44, led by industrial stocks Boeing (BA, +5.5%) and Caterpillar (CAT, +5.3%). The S&P 500 gained 0.3% to 3,360, and small caps had yet another productive day with the Russell 2000 climbing 1.0% to 1,584. The tech-heavy Nasdaq, however, finished 0.4% lower to 10,968.

How Can the U.S. Dollar Help You?

Continued uncertainty economically and geopolitically was good for gold, which resumed its uptrend after Friday's dip.

Gold futures for December improved 0.6% to $2,039.70 per ounce, extending a great year for metals that has sparked double-digit runs in gold funds and silver funds alike.

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But also helping out metal prices has been a weaker U.S. dollar.

BlackRock Investment Institute (BII) strategists write that "a prolonged period of U.S. dollar gains has reversed abruptly. The policy revolution to cushion the pandemic’s blow is a key driver, as it has eroded the dollar’s interest rate advantage and helped lift risk appetite off its March trough."

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Indeed, the U.S. Dollar Index, which measures the USD against a basket of other foreign currencies, is off roughly 10% since its March highs amid weak economic prospects and the Federal Reserve's heavy stimulus measures. And the dollar could be in for more turbulence, at least in the short term.

"Negotiations over the next round of fiscal relief measures have dragged on even as key benefits expire, while COVID cases are rising in most of the country," BII's strategists write. "We expect dollar weakness to persist in the near term as the drivers for its recent decline remain in place."

That's good for gold, but a weak dollar can prop up more than just the yellow metal. If you're an equity investor, you can look to a frail greenback to help big, blue-chip U.S. multinationals -- in the event that they record much of their sales overseas.

These 19 "weak dollar" stocks, for instance, could enjoy even more of a tailwind if the greenback continues to struggle, as their international sales will look more attractive when they convert those foreign currencies into U.S. dollars.

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