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)

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