By Sinéad Carew
NEW YORK (Reuters) - While the S&P was on track for its steepest August percentage gain in more than three decades it was largely unchanged for Monday's session as investors took a pause although the Nasdaq rallied thanks to high-flying stocks including Apple Inc (NASDAQ:AAPL).
The Federal Reserve's commitment to tolerate inflation and keep interest rates low, positive developments in vaccines and treatments for COVID-19 and a rally in tech-focused stocks have helped the S&P 500 and Nasdaq hit consecutive all-time highs.
But while states such as New Jersey continued to ease restrictions on Monday, investors noted that across the rest of the country, total coronavirus cases topped 6 million on Sunday as many states in the Midwest reported increasing infections, according to a Reuters tally.
"After such a strong summer run we're reverting back to the old pandemic playbook so we see tech outperforming," said Mona Mahajan, senior U.S. investment strategist at Allianz (DE:ALVG) Global Investors in New York, adding that investors were looking warily at U.S. and overseas COVID-19 numbers.
"Really that's a defensive move as people think about stay-at-home more as we're heading toward that fall season."
Nasdaq's top two contributors were Apple Inc, which rose 4.0%, and Tesla Inc which jumped 8.4%, after their preannounced stock splits took effect.
While the splits did not provide a fundamental reason for greater interest in the stocks, Mahajan noted that Apple's new stock price closer to $130 than $500 is likely making the stock more accessible to retail investors.
At 2:46 p.m. EDT, the Dow Jones Industrial Average was down 180.25 points, or 0.63%, at 28,473.62, the S&P 500 was up 2.22 points, or 0.06%, at 3,510.23 and the Nasdaq Composite added 121.01 points, or 1.03%, to 11,816.64.
The S&P was on track for a 7.2% gain for the month, its biggest gain for August since 1984 when it gained 10.6% for that month.
More than half of the S&P's 505 constituents are still in the red year-to-date.
"It's back to Nasdaq leadership and profit taking in other parts of the market," said Liz Ann Sonders, chief investment strategist at Charles Schwab (NYSE:SCHW).
"I worry that sentiment has gotten frothy and there's a lot of money in the market that doesn't see any downside risk."
Technology and consumer discretionary stocks outperformed among the major S&P sectors.
The three main indexes are also set for their fifth straight monthly rise following March lows, even as economic data pointed to an uneven recovery from the steep downturn.
U.S. presidential campaigns are set to take center-stage in the coming weeks with market volatility expected to spike ahead of polling in November.
New entrants to the blue-chip index, Salesforce.com Inc (NYSE:CRM) and Honeywell International Inc (NYSE:HON) slipped 0.8% and 1.8% while Amgen Inc (NASDAQ:AMGN) was flat.
Ousted companies Exxon Mobil Corp (NYSE:XOM), Pfizer Inc (NYSE:PFE) and Raytheon (NYSE:RTN) Technologies Corp also fell.
Aimmune Therapeutics Inc's shares were up 171% after Swiss food group Nestle SA (SIX:NESN) offered to pay $2 billion for full ownership of the peanut allergy treatment maker.
Shares of Microsoft Corp (NASDAQ:MSFT), Walmart (NYSE:WMT) Inc and Oracle Corp (NYSE:ORCL) - all suitors for TikTok's U.S. assets - fell as China's new rules around tech exports meant a deal with ByteDance could need Beijing's approval.
Declining issues outnumbered advancing ones on the NYSE by a 1.87-to-1 ratio; on the Nasdaq, a 1.33-to-1 ratio favored decliners.
The S&P 500 posted 31 new 52-week highs and no new lows; the Nasdaq Composite recorded 82 new highs and 18 new lows.