Wall Street Opens Higher; FAANGs Lifted by Tax Deadlock

By Geoffrey Smith 

Investing.com -- U.S. stock markets opened higher on Monday, with Big Tech megacaps buoyant after the Organization for Economic Cooperation and Development said that talks on a new system for taxing multinationals had failed to reach an agreement.

That leaves the likes of Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB) and Alphabet (NASDAQ:GOOGL) free to carry on using their current tax minimization strategies for the foreseeable future, despite concerns on the part of regulators on both sides of the Atlantic.

Optimism ahead of the scheduled release of its 5G iPhone 12 on Tuesday also supported Apple stock, which rose 3.1% in early trading to its highest in over a month.

By 9:45 AM ET (1345 GMT), the Dow Jones Industrial Average was up 121 points, or 0.4%, at 28,708 points, while the S&P 500 was up 0.8% and the Nasdaq Composite was up 1.2%. 

Investors were showing an increased willingness to look through the short-term deadlock over stimulus talks in the U.S. and focus on the prospect of a more effective package being agreed in the new year under a new administration. Fears about the possibility that President Donald Trump may contest the election result if he loses have receded as a string of polls have shown him clearly behind rival Joe Biden, both nationally and - to a lesser extent - in key battleground states.

Morgan Stanley (NYSE:MS) strategists argued in a note to clients that any such delay will hardly be fatal to the recovery, given that households appear to have been building up reserves over the summer. 

"It's possible that a stimulus delay wouldn’t fully develop into the economic challenge it has the potential to be," Morgan Stanley's Mike Zezas argued. "Our economists now see evidence that U.S. consumption can carry on for longer without fiscal support, given built-up excess household savings. This is good news as there are many viable political paths towards stimulus over the next three months."

Among individual stocks, the biggest gainers included cybersecurity firm Cloudflare (NYSE:NET), which rose 14% to a new all-time high after launching a new service that it claims will protect remote networks even against zero-day attacks.  Such services have gained in importance this year as the pandemic has forced the economy to adopt remote working. Recently-listed Snowflake, meanwhile, rose 6.3% as it started to attract investment recommendations, including a 'buy' rating from Goldman Sachs (NYSE:GS).

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