By Wallace Witkowski and Anora Mahmudova, MarketWatch
Nasdaq closes at highest level in more than a year
The S&P 500 barely missed a record closing high Friday, and
the Nasdaq Composite booked its best finish in more than a year as
Wall Street shook off earlier concerns about sluggish
second-quarter domestic growth to end with mostly tepid gains.
Meanwhile, the Dow Jones Industrial Average ended in negative
territory, weighed by a 1.5% decline in McDonald's Corp.(MCD)
shares.
The S&P 500 index closed up 3.54 points, or 0.2%, at
2,173.60, just shy of last Friday's all-time closing high of
2,175.03. The large-cap benchmark briefly touched a record intraday
high of 2,177.13.
The telecom and energy sectors led the gains. The energy sector,
which was down more than 1% in early trade, swung 0.7% higher for
the session. For the week, the benchmark index closed down 0.1%,
but gained 3.6% for the month.
The Nasdaq Composite gained 7.15 points, or 0.1%, to close at
5,162.13, marking its best closing level since July 22. The
tech-heavy index scored a 6.6% gain for the month and 1.2% for the
week.
Bucking the daily upward trend, the Dow industrials fell 24.11
points, or 0.1%, to finish at 18,432.24. The blue-chip index posted
a weekly loss of 0.8%, but ended the month up 2.8%.
Analysts said a rebound in oil prices likely drove the modest
bounce in equities. Oil for September delivery
(http://www.marketwatch.com/story/crude-oil-enters-bear-market-after-losing-41-handle-2016-07-29)
settled up 1.1% to $41.60 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.
Still, stocks mostly traded in a narrow range
(http://www.marketwatch.com/story/sp-500-hasnt-done-this-in-40-yearsand-its-a-bullish-sign-2016-07-29)
as they have over the past dozen sessions.
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.
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 expectations for a
2.6% pace. Anemic economic expansion 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, said
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. He doesn't expect the Fed to raise rates
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.
Read:Is Bank of Japan signaling that it's running out of ammo?
(http://www.marketwatch.com/story/is-bank-of-japan-signaling-that-its-running-out-of-ammo-2016-07-29)
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 is in its eighth year of
expansion.
Dallas Fed President Rob Kaplan on Friday said "structural
reforms and other fiscal policy" needed
(http://www.marketwatch.com/story/feds-kaplan-says-monetary-policy-has-reached-limits-for-bolstering-growth-2016-07-29)
jump-start the U.S. economy and that monetary policy has reached
its limits for driving growth.
Full speed on earnings: Cigna Corp.(CI) kicked off another busy
day of corporate results, sliding 5.2% after the health care
insurer significantly missed on earnings.
Merck & Co. Inc.(MRK) climbed 0.4% following an earnings
beat
(http://www.marketwatch.com/story/mercks-profit-and-revenue-rise-above-expectations-2016-07-29).
AbbVie Inc.(ABBV) gained 2.3% after raising its full-year
adjusted earnings outlook.
Xerox Corp.'s(XRX) shares rose 3.9% after profit rose more than
expected
(http://www.marketwatch.com/story/xerox-profit-rises-beats-expectations-2016-07-29).
Exxon Mobil Corp.(XOM) fell 1.3% 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) rose 0.7% 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 3.3% 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).
The company marked its second highest close ever.
Amazon.com Inc. (AMZN) shares rose 0.8% 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 2.2% after reporting earnings late
Thursday.
Other markets: European stocks 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 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 close. 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).
Gold prices rose 1.2% to $1,357.50 an ounce
(http://www.marketwatch.com/story/gold-pops-higher-after-weak-us-gdp-data-2016-07-29),
for a 2.8% gain in July.
The ICE dollar index fell 1.2% to 95.55.
--Sara Sjolin in London contributed to this article.
(END) Dow Jones Newswires
July 29, 2016 16:52 ET (20:52 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.