Dow, S&P 500 breaks records as investors shake off GDP figures, wait for Robinhood debut

The Dow Jones Industrial Average and S&P 500 indices hit intraday highs on Thursday as traders dismissed weaker-than-expected second-quarter GDP growth, focusing on largely optimistic corporate earnings reports and anticipating the trading debut of online brokers Robinhood Markets .

What do major indices do?
  • DJIA Dow Jones Industrial Average,
    + 0.55%
    increased by 169.55 points, or 0.5%, to 35,100.48.

  • S&P 500 SPX,
    + 0.55%
    increased by 24.37 points, i.e. 0.6%, to the level of 4,425.01.

  • Composite Nasdaq,
    + 0.28%
    gained 64.56 points or 0.4% to trade at 14,827.14.

On Wednesday the Dow DJIA,
+ 0.55%
and S&P 500 SPX,
+ 0.55%
closed lower, and strong results from Google owner Alphabet Inc. GOOGL,
performed by Nasdaq Composite COMP,
+ 0.28%

What drives the market?

The Department of Commerce said US gross domestic product grew at an annual rate of 6.5% in the second quarter, which is weaker than the 9.1% average forecast compiled by The Wall Street Journal economists’ survey. Separately, data from the Department of Labor showed that the number of applications for unemployment benefits fell for the first time last week by 24,000. up to 400 thousand

“Today’s GDP report reminds you that perspective is everything. Growth of 6.5% is strong by most measures, but contrary to expectations of 8.5% growth, it is still a disappointment, ”said Jim Baird, director of investments at Plante Moran Financial Advisors.

Analysts noted that expansion was stalled by a decline in government spending as federal stimulus payments fell in the second quarter. Meanwhile, consumer spending, the main engine of the economy, rose by 11.8% this spring, GDP figures show. That is four times faster than the typical increase in each quarter.

“The payback in home consumption, from dining to leisure, was a force to be reckoned with in the second quarter, accounting for the lion’s share of economic gains this quarter,” said Michael Reynolds, vice president of investment strategy at Glenmede, in the comments e-mail.

“For a sector that has been decimated by the cliff of falling demand by most of the pandemic, it is encouraging to see significant steps in the recovery path from the service economy,” he said.

While it is possible that the second quarter may indeed mark the “peak” in economic activity, it will not necessarily be a “market-shaping event” that investors should be concerned about, Reynolds said.

“In fact,” peak growth “is the classic early cycle, usually marking the beginning of a developing and sustained economic cycle as growth settles at lower (but more sustainable) levels, he said.

Meanwhile, home sales fell 1.9% in June, the National Association of Real Estate Agents said on Thursday. Economists polled by the Wall Street Journal predicted an increase of 0.5%.

Online brokerage Robinhood Markets
has been making its debut long after its IPO was priced at the lowest level of expectation.

The corporate earnings reporting season for the second quarter continues, when the e-commerce giant AMZN,
post-trade reports.

Which companies are in focus?
  • Trevor Milton, founder of an electric truck company Nikola Corp.
    was charged on three counts of fraud by the US Attorney’s Office for the New York South District for making “false and misleading statements” to investors about “almost all aspects of the business”, according to an indictment before a grand jury that opened on Thursday. Shares fell by more than 7.8%.

  • Facebook Inc. FB shares fell 3.6% as the social media giant, like other tech titans, exceeded its second-quarter earnings estimates, but also led to a slowdown in revenue growth in the second half of the year.

  • PayPal Holdings Inc. PYPL broke estimates, but sales in the current quarter will not meet expectations. Shares fell 4.7%.

  • Ford Motor Co.
    + 3.28%
    Wednesday’s late Wednesday posted an unexpected quarterly profit, saying that “strong” demand for the vehicles has allowed it to forgo discounts and signal signs of improvement in chip deliveries. Shares increased by 3.8%.

  • Mastercard Inc.
    + 1.92%
    equities rose 2% after the firm outperformed expectations with its second-quarter results on Thursday amid a further recovery in spending trends.

  • Comcast Corp.
    + 0.67%
    surpassed earnings and revenue expectations on Thursday after showing some recovery in the parks industry as well as continued growth in the cable segment. The shares rose by 2%.

  • Qualcomm Inc. QCOM,
    + 5.51%
    profits more than doubled in the second quarter, and executives said the chip company was significantly improving its access to foundries during a global semiconductor shortage where performance constraints hampered the sector. Shares increased by 5.7%.

  • Uber Technologies Inc.
    fell 2.8% after the announcement late Wednesday that SoftBank Group Corp. sells about one-third of its shares in the company.

What are other markets doing?
  • Profitability of the 10-year TMUBM USD10Y treasury bill,
    fell by 1 basis point to 1.252%. Yields and debt prices are moving in opposite directions.

  • US dollar index ICE DXY,
    the currency measure against the basket of six main rivals fell by 0.5%.

  • Oil futures rose and the US benchmark CL00,
    + 1.30%
    Up 1% and Gold Futures GC00,
    + 1.73%
    jumped 1.6%, being on track for the biggest one-day growth since mid-May.

  • In European equities, the Stoxx 600 Europe SXXP index,
    + 0.46%
    increased by 0.4%, while the London-based FTSE 100 UKX,
    + 0.88%
    advanced 0.9%.

  • In Asia, Hang Seng HSI,
    + 3.30%
    gained 3.3% after reports that Chinese authorities tried to appease leading foreign institutions over the wave of regulatory action. The index remains down 3.7% during the week. Shanghai Composite SHCOMP,
    + 1.49%
    increased by 1.5%, and the Japanese Nikkei 225 NIK,
    + 0.73%
    gained 0.7%.

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