Stock Market Today: A Red-Hot Start to August

The market kicked off the new month by rocketing higher as investors remained laser-focused on the good and shut out other discouraging developments.

For instance, Republicans and Democrats appear to be far apart on another round of urgently needed stimulus, but investors favored instead an Institute of Supply Management report showing that manufacturing improved more than expected in July, at a reading of 54.2 that was up from June's 52.6. Still, overall activity remains heavily depressed from pre-pandemic levels.

"Comments from respondents were surprisingly downbeat given the improvement in the composite," write Barclays researchers. "Only two respondents (from the 'computers and electronics'. industry and 'chemicals') seemed genuinely upbeat about demand conditions, with most others flagging a slowing pattern of new orders.

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"Uncertainty and consolidation also seem to be the order of the day, with at least one respondent (transportation equipment) pointing to substantial layoffs in the coming months and another (nonmetallic metal products) stating that plans are afoot to consolidate production.

The Dow Jones Industrial Average finished up 0.9% to 26,664, the S&P 500 gained 0.7% to 3,294, and the Nasdaq Composite improved 1.5% to a record-high 10,902%. All three indices were helped by Microsoft (MSFT, +5.6%), which surged on reports that it is trying to buy the U.S. business of popular Chinese-owned social app TikTok. The app is set to be banned in the U.S. Sept. 15 as a potential national security threat over its data collection abilities.

The small-cap Russell 2000 continued its boom-or-bust ways of late, jumping 1.8% to 1,506. Meanwhile, gold finished 0.1% higher to $1,986.30 per ounce after crossing the $2,000 mark earlier in the day.

A Big Day for EVs and SPACs

One of the biggest industry winners Monday: electric vehicle (EV) stocks.

China's Nio (NIO, +13.8%) announced it delivered 3,533 vehicles in July, a whopping 322% year-over-year improvement. Meanwhile, electric-van maker Workhorse Group (WKHS, +23.6%) jumped on news that Lordstown Motors, which it owns a 10% stake in, will be acquired by DiamondPeak (DPHC) -- one of several special purpose acquisition companies, or SPACs, that are the latest rage on Wall Street. If you like to follow the "smart money,"

SPACs, which have been around since 1980, are a more direct way of doing it. You effectively invest your money into a company -- sponsored by private equity, hedge funds and other billionaire types -- that will then use that money to purchase another company, which is why they're sometimes also called "blank check" companies.

Read on as we explain how SPACs work and highlight several companies -- some already public, some that have filed for IPOs -- that should be on your radar.