Stocks closed at new highs for the S&P 500 and Nasdaq Composite indexes on Friday, as investors welcomed strong corporate earnings, government approval of the T-Mobile and Sprint merger, and better-than-expected economic growth.
How are the major benchmarks faring?
The Dow Jones Industrial Average
ended up 51.47 points, or 0.2%, at 27,192.45, while the S&P 500 index
closed up 22.19 points, or 0.7%, at 3,025.86. The Nasdaq Composite
advanced 91.67 points, or 1.1%, at 8,330.21.
In addition to the all-time closing high, the S&P 500 registered a new intraday record at 3,027.98 while Nasdaq saw a record intraday high at 8,339.64.
The S&P 500 has risen for six of the past eight weeks and is now up 20.7% for the year to date, while Nasdaq is up 25.5% for the year.
What’s driving the market?
all reported better-than-expected earnings late Thursday or early Friday and led the market up.
To date, 44% of S&P 500 index companies have reported quarterly earnings for the second quarter and 77% have posted a stronger-than-forecast profit, according to FactSet.
The U.S. Justice Department officially approved the merger between T-Mobile US Inc
leading to gains for all three stocks.
On the economic front, the U.S. economy grew at an annualized pace of 2.1% in the second quarter, according to the Commerce Department, slowing from 3.1% in the first three months of the year, but faster than the 1.9% expected by economists, per a MarketWatch poll.
Some of the details of the report were stronger than the headline number, with consumer spending surging to 4.3% growth from a 1.1% gain in the first quarter. However, business investment shrunk 0.8%, the biggest drop in 3½ years, a figure that likely provides enough cause for concern to keep the Federal Reserve on track to deliver an interest-rate cut when it meets next week.
“The data clearly shows signs of a bifurcated economy,” wrote Michael Reynolds, investment strategy officer at Glenmede, in an email. “Weakness in manufacturing has weighed on components like inventories and fixed investment, but the healthy U.S. consumer has helped buoy the economy as seen in the stable reading on personal-consumption expenditures.”
Despite the better-than-expected GDP data, the Fed is fully expected to cut interest rates by at least a quarter point when it meets July 30-31.
“The Fed still has the green light to cut rates,” said Stephen Gallagher, U.S. chief of economics at Société Générale.
“It is pretty difficult to pull back from signaling rate cuts and the risks are still there,” Gallagher said.
Next week also brings resumption of trade talks between the U.S. and China in Shanghai but National Economic Council Director Larry Kudlow told CNBC that he would not expect “a grand deal” soon.
Which stocks are in focus?
Shares of Google parent Alphabet Inc.
soared 10% Friday after reporting second-quarter results that topped Wall Street profit and revenue expectations and announcing a $25 billion share buyback program.
shares were up after the chip giant posted a big earnings beat and raised its outlook for the year late Thursday.
Shares of social-media company Twitter Inc.
jumped 9% after the company posted better-than-expected user and revenue growth.
Shares of Amazon.com Inc.
fell after the e-commerce giant reported results late Thursday that ended a year-long run of record quarterly profits.
Coffee retailer Starbucks Corp.
shares ended up 9% after it bested forecasts for profit and sales late Thursday and raised its guidance for the year.
Dow component McDonald’s Corp.
reported second-quarter earnings and revenue that beat expectations, sending the stock up
Shares of drugmaker AbbVie Inc.
rose after reporting second-quarter results Friday.
How did other markets trade?
The yield on the 10-year U.S. Treasury note
was little changed around 2.08%.
In commodities markets, the price of crude oil
rose modestly, while gold prices
was steady around $1,419.10 per ounce.
The U.S. dollar index
rose 0.2% to 98 after White House economic adviser Larry Kudlow told CNBC that the administration had ruled out intervening in currency markets after a meeting of cabinet officials and economic advisers. The British pound fell to a new two year low at $1.2386.
Asian markets closed mixed overnight Thursday, with China’s CSI 300
index rising 0.2%, Japan’s Nikkei 225
adding 0.5% and Hong Kong’s Hang Seng