Stocks rose Friday, with the S&P 500 index trading at an all-time high and the Dow Jones Industrial Average pushing above 35,000, as investors assessed corporate earnings and brushed off worries about the spread of the delta variant of the coronavirus that causes COVID-19.
What are major indexes doing?
- The Dow Jones Industrial Average DJIA, +0.61% was up 210.42 points, or 0.6%, at 35,033.77, on track to finish above the 35,000 milestone for the first time.
- The S&P 500 SPX, +0.82% traded at an all-time high and was up 36.14 points, or 0.8%, at 4,403.62.
- The Nasdaq Composite COMP, +0.75% was up 112.76 points, or 0.8%, at 14,797.36, and like the Dow and S&P 500 was on track to close above its previous record finish from July 12.
On Thursday, stocks finished modestly higher, with the Dow DJIA, +0.61% rising 25.35 points, or 0.1%, to 34,823, while the S&P 500 SPX, +0.82% rose 0.2% and the Nasdaq Composite COMP, +0.75% advanced 0.4%.
What’s driving the market?
The “buy-the-dip” mantra was on track to work again this week, with stocks taking back all the ground lost, and then some, after a Monday rout that saw the Dow suffer its biggest one-day loss since October.
Stocks were higher across the board Friday and aiming for record finishes. The Dow pushed back above the 35,000 milestone — a level it has never closed above — after briefly trimming gains in the wake of IHS Markit purchasing managers index readings. The U.S. composite output index fell to 59.7 in July from 63.7 a month earlier, a four-month low, reflecting a drop in the services index, though the manufacturing PMI rose to 63.1, a record for the series.
Meanwhile, technology stocks continued to curry favor with investors, with more positive earnings news late Thursday from Twitter and Snapchat parent Snap.
“Both Twitter and Snap posted strong earnings and revenue beats, and guided well ahead of estimates,” said Edward Moya, senior markets analyst at Oanda, in a note.
“If these results are a sign of what to expect next week, many traders might start buying ahead of next week’s big tech earnings,” he said. But the sharp rebound for stocks might not be cause for near-term comfort, Moya warned, arguing that the short-lived nature of the pullback means “investors should not be surprised if another pullback presents itself.”
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Investors were looking to the week ahead, which will feature a meeting of Federal Reserve policy makers and earnings reports from a number of tech heavyweights, including Tesla Inc. TSLA, -1.69%, Apple Inc. AAPL, +0.77%, Google parent Alphabet Inc. GOOG, +2.74% GOOGL, +2.58%, Microsoft Corp. MSFT, +1.08% and Amzon.com Inc. AMZN, +0.23%.
A strong performance by technology stocks has come amid concerns about the impact on the economy from rising numbers of cases of the highly contagious delta variant of coronavirus, notably in states that have seen lower vaccination rates.
“From the names seen so far, U.S. quarterly earnings have come in predictably strong, but they haven’t blown the lights out, with a market trying to understand the macro, and downwardly revised global Q3 growth estimates,” said Chris Weston, head of research at Pepperstone, in a note. “That should change this coming week and corporate earnings will provide big opportunities on a stock level.
With a quarter of the S&P 500 index companies now reported, profit growth for the second quarter is expected to be 76%, compared to the second quarter last year during the worst of the pandemic, the best growth since 2009, according to Refinitiv. Profit margins have been sustained in the face of rising inflation. So far for the second quarter, companies are reporting average profit margins of 12.8%, above the historic range, according to S&P Global.
Which companies are in focus?
- Shares of Snap Inc. SNAP, +22.68% surged 21% after the social-media company late Thursday said it saw revenue more than double in the last quarter thanks to a continued rebound in the advertising market.
- Twitter Inc. TWTR, +4.48% late Thursday said it swung to a profit in the second quarter, while revenue rose as the social-media company increased its share of active users. Share rose 3.6%.
- Intel Corp. INTC shares fell 5% after the chip maker late Thursday reported results that topped expectations, but saw its outlook barely surpass the average forecast from Wall Street analysts.
- American Express Co. AXP, +2.69% American Express topped earnings and revenue expectations Friday morning, while also pointing to an acceleration in spending and “robust” interest in its fee-based cards. Shares of the Dow component rose 2.8%.
- Boston Beer SAM, -24.37% stock tumbled 22% after the maker of Sam Adams beer and Truly-branded alcoholic teas and seltzers, reported a second-quarter profit fall and earnings miss. Executives also slashed the annual forecast they had just lifted three months prior.
- Shares of Dow component Honeywell International Inc. HON, -2.49% were down 2.2% after the aerospace and industrials company reported second-quarter profit and sales that beat expectations and raised its full-year outlook.
- Schlumberger Ltd. SLB, -0.25% shares were flat after the oil services company reported second-quarter profit and revenue that beat expectations, and said it expects the momentum of international activity growth to continue despite concerns over potential resurgence of COVID-19-related disruptions.
What are other markets doing?
- The yield on the 10-year Treasury note TMUBMUSD10Y, 1.289% rose more than 3 basis points to 1.292%. Yields and debt prices move in opposite directions.
- The ICE U.S. Dollar Index DXY, +0.15%, a measure of the currency against a basket of six major rivals, rose 0.1%.
- Oil futures edged lower, with the U.S. benchmark CL00, -0.22% down 0.1% to $71.85 a barrel, while gold futures GC00, -0.17% were off 0.2% at $1,801.60 an ounce.
- In European equities, the Stoxx Europe 600 SXXP, +1.09% rose 1.1%, while London’s FTSE 100 UKX, +0.85% advanced 0.9%.
- In Asia, the Shanghai Composite SHCOMP, -0.68% fell 0.7%, while the Hang Seng Index HSI, -1.45% fell 1.4%.
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