Tech shares, muted GDP growth push S&P 500 to record

Reuters July 30 | Updated on January 18, 2018 Published on July 30, 2016

Below expectations growth has fuelled arguments the Fed may not need to raise US interest rates anytime soon

Wall Street rose on Friday, with the S&P 500 index hitting a record intra-day high for the seventh time this month as gains in technology heavyweights Alphabet and Amazon more than made up for losses in energy shares.

The benchmark index rose as much as 0.3 per cent, touching an all-time high of 2,177.09, and completed its fifth straight month of gains.

Alphabet, Amazon support, Exxon McDonald’s weigh

Shares of Google parent Alphabet jumped 3.33 per cent a day after the Internet company posted strong quarterly revenue growth, while online retailer touched a record high after giving an upbeat forecast for the current quarter.

Alphabet contributed the most to gains on the Nasdaq and the S&P 500.

However, the Dow was dragged down by a 1.48 per cent drop in McDonald's and a 1.39 per cent fall in Exxon, which reported a lower-than-expected quarterly profit. The stock was the top percentage loser on that index.

Aggregate second-quarter earnings of S&P 500 companies are now expected to fall 3.7 per cent, worse than a 2.8 per cent decline predicted on Thursday, according to Thomson Reuters I/B/E/S.

GDP growth misses expectations

US gross domestic product in the second quarter grew at a 1.2 per cent rate, coming in below expectations for a rise of 2.6 per cent and fuelling arguments the Federal Reserve may not need to raise US interest rates anytime soon.

“Investors are still willing to play chicken with the Fed, thus the S&P 500 has hit a new intra-day all-time high,” said Sam Stovall, US equity strategist at S&P Global Market Intelligence in New York.

Volumes strong

The Dow Jones industrial average ended down 0.13 per cent at 18,432.24 while the S&P 500 gained 0.16 per cent to 2,173.6.

The Nasdaq Composite added 0.14 per cent to 5,162.13.

For the week, the Dow fell 0.75 per cent, the S&P edged down 0.07 per cent and the Nasdaq rose 1.2 per cent.

In July, the Dow rose 2.8 per cent, the S&P climbed 3.6 per cent and the Nasdaq surged 6.6 per cent.

Volume was strong as investors wrapped up July. About 7.3 billion shares changed hands on US exchanges, above the nearly 6.6 billion daily average over the past 20 sessions.

On Friday, seven of the 10 major S&P 500 indexes were higher, led by a 1.33 per cent rise in the telecoms services index.

Baidu dropped 3.64 per cent after the Chinese Internet search engine posted its biggest quarterly profit decline since going public. The stock weighed the most on the Nasdaq.

Health insurer Cigna dropped 5.17 per cent after reporting a lower-than-expected quarterly profit.

Advancing issues outnumbered declining ones on the NYSE by a 1.68-to-1 ratio; on Nasdaq, a 1.03-to-1 ratio favoured advancers.

The S&P 500 posted 41 new 52-week highs and one new low; the Nasdaq Composite recorded 104 new highs and 35 new lows.

Published on July 30, 2016
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