Nasdaq, S&P 500 Hit Records on Earnings and GDP
By Corrie Driebusch
The Nasdaq Composite and the S&P 500 hit record highs as
strong earnings and healthy growth in gross domestic product buoyed
stocks across the board.
Twitter Inc., Coca-Cola Co. and McDonald's Corp. rose Friday
after upbeat earnings reports this week.
Google's parent, Alphabet Inc., helped lead stocks higher with a
banner day, surging after it reported a jump in revenue for its
latest quarter and authorized a buyback. It added a staggering $79
billion in market value, rising $109.28, or 9.6%, to $1,245.22.
That was the company's best single-day percentage gain in years and
its biggest dollar gain ever.
Alphabet boosted its market capitalization to more than $860
billion, according to FactSet, adding roughly the value of Morgan
Stanley in just a day. Alphabet's market-cap addition was larger
than the individual market values of all but 72 other companies in
the S&P 500. The company also blew past options traders'
forecasts for a post-earnings move.
Analysts said the strength of the U.S. consumer, evident in some
of the latest financial results and economic data, as well as
expectations that the Federal Reserve will soon cut interest rates,
has helped nudge stocks higher. Cooling trade tensions also helped
lift stocks this week after news that U.S. negotiators would travel
to Shanghai to resume formal negotiations on trade.
Data released early Friday showed that gross domestic product
grew at a 2.1% annual rate in the second quarter, the Commerce
Department said, narrowly above the 2% expected by economists
surveyed by The Wall Street Journal. The figure was boosted by U.S.
shoppers, as consumer spending, which makes up more than two-thirds
of the economy, posted the strongest pace of growth since late
"The [GDP] report should give people comfort...that the consumer
is doing well," said Chris Zaccarelli, chief investment officer at
Independent Advisor Alliance. "The U.S. economy continues to be on
a stronger footing than the rest of the world."
On Friday, the S&P 500 rose 22.19 points, or 0.7% to
3025.86, notching its 13th record of the year. The tech-heavy
Nasdaq Composite gained 91.67 points, or 1.1%, to 8330.21, its 10th
record of 2019. And the Dow Jones Industrial Average edged up 51.47
points, or 0.2%, to 27192.45.
All three major U.S. indexes finished the week with gains, with
the S&P up 1.7%, the Dow Jones up 0.1% and the Nasdaq up
The communication-services sector was the best performer of the
S&P 500's 11 groups Friday, increasing more than 3% and lifted
by Twitter and Alphabet, its biggest gainers. Twitter shares soared
after it reported strong user and revenue growth in its second
quarter. The social-media company's stock jumped $3.40, or 8.9%, to
Investors have been watching tech heavyweights this earnings
season as Microsoft Corp., Apple Inc. and Amazon.com Inc. have
helped to drive the S&P 500's record run this year. Big money
managers have increased their stakes in these types of companies,
which have been some of the best performers.
So far in 2019, tech companies have been winners as investors
look for growth. The S&P 500 tech sector has risen 33% since
the end of 2018, outpacing the broader index's 21% gain in the same
Alphabet's massive gain Friday didn't manage to move it up the
list of the biggest companies -- it remained fourth in the S&P
500, behind Microsoft, Apple and Amazon. Its jump Friday came after
it was the worst-performing tech company valued above $100 billion
this year heading into its earnings report.
As market volatility recedes and stocks continue their ascent,
some analysts and investors said they expected greater gains for
equities. Friday's data underscored the strength of the U.S.
economy, analysts said. Now, many are preparing for the Fed to cut
interest rates and provide a boost. The central bank meets next
"I think overall, the market's headed higher into year-end,"
said Bruce Bittles, chief investment strategist at Robert W. Baird
Write to Corrie Driebusch at email@example.com
(END) Dow Jones Newswires
July 26, 2019 19:26 ET (23:26 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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