By Anora Mahmudova and Wallace Witkowski, MarketWatch

U.S. GDP grows at sluggish 1.2%

The S&P 500 index hit a record in intraday trading Friday as U.S. stocks shook off earlier concerns about sluggish second-quarter domestic growth, but the Dow industrials remained under pressure.

Analysts noted that a rebound in oil prices might be driving a modest bounce in equities, but that support slipped away with oil prices flat at last check at $41.14 a barrel.

"None of the data that came out earlier were good and there wasn't any company-specific news that would lift the markets, instead it's the tractor beam of oil that is pushing equities higher," said Kim Caughey Forrest, senior analyst and portfolio manager at Fort Pitt Capital Group.

Earlier, disappointing economic data weighed on sentiment. The U.S. economy grew at a slower pace than expected in the second quarter. The tepid 1.2% annual growth rate was due to a large decline in business investment (http://www.marketwatch.com/story/second-quarter-gdp-rises-just-12-well-below-forecast-2016-07-29), according to the Commerce Department. Meanwhile, first-quarter growth was also reduced to a 0.8% annual rate from the prior estimate of a 1.1% gain.

The S&P 500 index gained 3 points, or 0.1%, to trade at 2,173, after reaching a new all-time intraday high of 2,177.13. The telecom and utilities sectors led the gains. The energy sector, which was down more that 1% in early trade, pared losses to trade 0.2% lower. The benchmark index is on track to finish the week at a fractional loss and post a 3.5% gain over the month.

The Dow Jones Industrial Average was off 29 points, or 0.2%, at 18,428. The blue-chip index is set to post weekly losses, but still end the month 2.8% higher.

The Nasdaq Composite was up 6 points, or 0.1%, to 5,161. The tech-heavy index was set for an 6.6% advance for the month and a 1.2% gain for the week.

Economic news: The first estimate of second-quarter gross domestic product (http://www.marketwatch.com/story/us-second-quarter-gdp-increases-at-sluggish-12-annual-rate-2016-07-29)came in at a sluggish 1.2% annual rate, far below the expectations of 2.6% pace. Lackluster growth could derail the Federal Reserve's intentions to raise interest rates at a gradual pace.

Second-quarter business inventories contracted for the first time since 2011. Meanwhile, the employment cost index rose 0.6%.

Joseph Lake, economist at The Economist Intelligence Unit, noted even as the headline numbers looked weak, the details show the U.S. economy is healthier than it appears.

"Private consumption grew by a whopping 4.2% in the second quarter, and given the importance of the American consumer to the world right now, that is a big relief," Lake wrote in emailed comments.

"The economy is chugging along in a fairly steady recovery, creating plenty of jobs, but failing to quicken to a pace that would leave the Fed feeling comfortable enough to remove more of its support," Lake said, adding that he does not expect rate increases this year.

A measure of Chicago-area economic activity retreated only slightly in July after a strong gain in the prior month. Consumer sentiment weakened in July as politics and the economy weighed on most Americans, the University of Michigan said Friday.

Earlier, disappointment over Bank of Japan's latest easing action also weighed on sentiment.

The BOJ made no changes to interest rates (http://www.marketwatch.com/story/bank-of-japan-oks-more-stimulus-keeps-rate-steady-2016-07-29) or to its bond-buying program. However, the central bank did increase its purchase of exchange-traded funds to Yen6 trillion ($57 billion) annually from Yen3.3 trillion previously.

Federal Reserve speakers:San Francisco Fed President John Williams (http://www.marketwatch.com/story/feds-williams-says-hes-not-concerned-about-a-recession-2016-07-29-11103730)said Friday he wasn't worried about a greater risk of a recession in the U.S. economy even though the economy isn't in its eighth year of expansion.

Dallas Fed President Rob Kaplan is scheduled to speak at the Independent Bankers Association of New Mexico at 1 p.m. Eastern.

Full speed on earnings: Cigna Corp.(CI) kicked off another busy day of corporate results, sliding 4.7% after the health care insurer significantly missed on earnings.

Merck & Co. Inc.(MRK) climbed 0.3% following an earnings beat (http://www.marketwatch.com/story/mercks-profit-and-revenue-rise-above-expectations-2016-07-29).

AbbVie Inc.(ABBV) gained 2% after raising its full-year adjusted earnings outlook.

Xerox Corp.'s(XRX) shares rose 2.9% after profit rose more than expected (http://www.marketwatch.com/story/xerox-profit-rises-beats-expectations-2016-07-29).

Exxon Mobil Corp.(XOM) fell 2.2% after the company's second-quarter profit and revenue fell short of analyst estimates (http://www.marketwatch.com/story/exxon-mobil-shares-fall-26-premarket-after-company-misses-on-profit-and-revenue-2016-07-29).

Chevron Corp.(CVX) slipped fractionally after the company swung to a loss for the second quarter as it booked impairment and other charges.

United Parcel Service Inc.(UPS) shares fell 0.6% after the shipping company reported earnings in line with expectations.

Shares of Alphabet Inc.(GOOGL) rose 4.4% after the Google-parent late Thursday reported earnings and revenue well above Wall Street expectations (http://www.marketwatch.com/story/googles-alphabet-shares-hit-intraday-record-high-after-earnings-2016-07-28).

Amazon.com Inc. (AMZN) shares rose 1.4% after the company had reported earnings that beat estimates (http://www.marketwatch.com/story/amazon-posts-huge-quarterly-beat-but-very-wide-operating-income-outlook-2016-07-28) late Thursday.

Shares of Western Digital Corp.(WDC) dropped 12% after the computer storage company late Thursday swung to a loss in the latest quarter (http://www.marketwatch.com/story/western-digital-posts-a-loss-but-tops-forecasts-2016-07-28-16485455).

Expedia Inc.(EXPE) slumped 1.9% after reporting earnings late Thursday.

Other markets: European markets marched higher (http://www.marketwatch.com/story/european-stocks-advance-as-bank-shares-move-higher-ahead-of-stress-tests-2016-07-29), with banks leading the charge north ahead of stress-test results from the European Banking Authority (http://www.marketwatch.com/story/europe-stress-test-results-to-put-spotlight-on-italys-troubled-banks-2016-07-28), due after the market closes. Japan's Nikkei 225 index initially declined, but ended the day 0.6% higher (http://www.marketwatch.com/story/asian-markets-cautious-as-investors-await-word-from-bank-of-japan-2016-07-28).

Oil price fell flat after an earlier rebound (http://www.marketwatch.com/story/crude-oil-enters-bear-market-after-losing-41-handle-2016-07-29) to trade just above $41 a barrel, after the U.S. benchmark briefly slid into bear territory. Gold inched 1.1% higher.

The ICE dollar index fell 1.1% to 95.68.

--Sara Sjolin in London contributed to this article.

(END) Dow Jones Newswires

July 29, 2016 12:57 ET (16:57 GMT)

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