Traders and finance professionals work on the floor of the New York Stock Exchange.
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US stocks rose on Friday, with the S&P 500 hitting a new high as all major averages cleared worries about economic growth earlier in the week.
The Dow Jones Industrial Average rose 201 points, or 0.5%, to win for the fourth straight day. The S&P 500 and Nasdaq Composite were up 1%. The S&P 500 is on course for a record close above the July 12th closing high.
The 10-year government bond yield rose to 1.285% on Friday, easing economic concerns raised by the bond market on Monday. The 10-year yield fell to a 5-month low of 1.13% earlier this week.
“We expect the markets to remain choppy, but there is no basic justification for more aggressive sales,” wrote the Barclays strategists in a customer announcement. “In fact, the strong recovery since Tuesday shows that the animal spirits are intact.”
Strong gains from technology stocks kept investors optimistic amid reports from the biggest names in the industry over the next week. Twitter and Snap both rose Thursday after better-than-expected earnings reports for the second quarter. Twitter traded 3% higher while Snap shot 24%.
Facebook gained more than 5.5% in the results of its social media competitors. Alphabet added 3.5%. Both will report next week together with Apple, Microsoft and Amazon.
All three US stock averages are on track to close the week in the green after recovering from last week’s losses and sharp sell-off on Monday. The Dow lost more than 700 points at the start of the week as yields fell, unsettling equity investors about the economy.
The S&P 500 is up 1.95% this week and the Nasdaq Composite is up 2.8%. Both are also within 1% of their intraday records. The Dow is up 1% for the week.
The strength of tech stocks also comes along with the continued proliferation of the highly contagious Delta variant of Covid.
“We saw in the depths of the pandemic that tech stocks and their earnings did best at BMO Wealth Management,” said. “Long-term interest rates, which are falling as much as they did, also make these stocks more attractive.”
The equity market as a whole was supported by a strong reporting season, with nearly a quarter of the S&P 500 reporting. According to FactSet, 88% of these companies reported a positive surprise. This would be the highest percentage of reported surprises in the S&P since 2008 if this value were maintained throughout the reporting season.
According to Refinitiv, earnings growth of 76% is expected for the second quarter, which would be the best growth since 2009. so far for the second quarter above the historical range, according to S&P Global.
American Express reported better-than-expected quarterly results on Friday morning, giving its stocks a 1.5% gain. Honeywell also reported strong gains, despite the fact that the stock was down 2%.
Kimberly-Clark shares traded slightly higher after reporting earnings in line with Wall Street forecasts. The annual forecast was also lowered, citing higher costs and lower volumes.