U.S. stocks rise to all-time highs, as Dow closes above 35,000 for first time
By Christine Idzelis and William Watts
Snap, Twitter shares rise after upbeat earnings
Stocks finished at record highs Friday, with the Dow Jones Industrial Average index closing above 35,000 for the first time, and the S&P 500 and Nasdaq Composite also at new highs, as investors cheered corporate earnings reports and brushed off worries about the delta variant of the coronavirus slowing the economic recovery. .
What did major indexes do?
On Thursday (https://www.marketwatch.com/story/stock-index-futures-rise-ahead-of-jobless-claims-11626949759?mod=market-snapshot), stocks finished modestly higher, with the Dow rising 25.35 points, or 0.1%, to 34,823, while the S&P 500 rose 0.2% and the Nasdaq Composite advanced 0.4%.
For the week, the Dow rose 1.1%, the S&P 500 climbed 2% and the Nasdaq advanced 2.8%, according to FactSet data.
What drove the market?
Major stock benchmarks booked weekly gains and rose to record highs, after a dramatic turnaround from a Monday slump that saw the Dow suffer its biggest one-day loss since October. The last time the Dow fell at least 2% on a Monday and closed at a record on the Friday of that week was August 1991, according to Dow Jones Market Data.
"The buy-the-dip mentality is still pretty alive and healthy," said Jason Vaillancourt, co-head of global asset allocation at Putnam Investments, in an interview Friday. The S&P 500 index bounced after testing support at its 50-day moving average on Monday.
Related:Think this is a weird market right now? Here's more proof (https://www.marketwatch.com/story/think-this-is-a-weird-market-right-now-heres-more-proof-11626902011)
Technology stocks continued to curry favor with investors, with more positive earnings news late Thursday from Twitter and Snapchat parent Snap.
"Both Twitter and Snap posted strong earnings and revenue beats, and guided well ahead of estimates," said Edward Moya, senior markets analyst at Oanda, in a note.
"If these results are a sign of what to expect next week, many traders might start buying ahead of next week's big tech earnings," he said. But the sharp rebound for stocks might not be cause for near-term comfort, Moya warned, arguing that the short-lived nature of the pullback means "investors should not be surprised if another pullback presents itself."
A strong performance by technology stocks has come amid concerns about the impact on the economy from rising numbers of cases of the highly contagious delta variant of coronavirus, notably in states that have seen lower vaccination rates.
Strong corporate earnings are helping to fuel the stock market higher, said Ryan Detrick, chief market strategist for LPL Financial, said in an interview Friday. The Dow crossing 35,000 Friday is "a nice reminder that we've avoided the asteroid once again."
With about a quarter of the S&P 500 index companies now reported, profit growth for the second quarter is expected to be 76%, compared with the second quarter last year during the worst of the pandemic, the best growth since 2009, according to Refinitiv. Profit margins have been sustained in the face of rising inflation. So far for the second quarter, companies are reporting average profit margins of 12.8%, above the historic range, according to S&P Global.
The Dow closed above the 35,000 milestone for the first time, after briefly trimming gains in the wake of IHS Markit purchasing managers index readings. The U.S. composite output index fell (https://www.marketwatch.com/story/u-s-economy-cools-a-bit-after-rocketing-higher-in-second-quarter-ihs-markit-pmi-data-show-11627050002?mod=mw_latestnews)to 59.7 in July from 63.7 a month earlier, a four-month low, reflecting a drop in the services index, though the manufacturing PMI rose to 63.1, a record for the series.
The PMI readings are "still signaling pretty robust expansion," said Putnam's Vaillancourt.
Also see:Why the S&P 500 could be poised for a 5% drop -- or even more this summer (https://www.marketwatch.com/story/why-the-s-p-500-could-be-poised-for-a-5-drop-or-even-more-this-summer-11626899908?mod=article_inline)
Investors were looking to the week ahead, which will feature earnings reports from a number of tech heavyweights, including Tesla Inc. (TSLA), Apple Inc. (AAPL), Google parent Alphabet Inc. (GOOGL)(GOOGL), Microsoft Corp. (MSFT) and Amzon.com Inc. (AMZN).
Opinion: Amazon's stock looks tired. Consider buying shares of these five fast-growing e-commerce plays instead (https://www.marketwatch.com/story/amazons-stock-looks-tired-consider-buying-shares-of-these-five-fast-growing-e-commerce-plays-instead-11627049582?mod=MW_article_top_stories)
Next week also features a meeting of Federal Reserve policy makers, but economists don't expect it to produce clear answers to questions about when the central bank will begin slowing down purchases of government bonds.
See:Fed to tiptoe toward tapering next week (https://www.marketwatch.com/story/fed-to-tiptoe-towards-tapering-next-week-11627061356?mod=mw_latestnews)
Investors will also be watching developments around the U.S. federal debt ceiling. Treasury Secretary Janet Yellen on Friday warned lawmakers that the pandemic has scrambled accounting tricks (https://www.marketwatch.com/story/yellen-turns-up-heat-on-congress-to-tackle-debt-ceiling-11627064172?mod=mw_latestnews) the government has used in the past to avoid default on its debt. A 2019 agreement to suspend the debt limit expires on Aug. 1.
Read: More than 1 in 10 Americans invested in crypto this year -- here's how they differ from stock market investors (https://www.marketwatch.com/story/more-than-1-in-10-americans-invested-in-crypto-this-year-heres-how-they-differ-from-stock-market-investors-11626980261?mod=home-page)
Which companies were in focus?
What did other markets do?
--Barbara Kollmeyer contributed to this report .
-Christine Idzelis; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
July 23, 2021 16:48 ET (20:48 GMT)
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