Wall Street gained ground for the fourth straight session on Friday, extending a rally that pushed all three major US stock indexes to record closing highs as upbeat earnings and signs of economic revival fuelled investor risk appetite.
The Dow closed above 35,000 for the first time ever.
“We see a continuation of the last couple days. It’s roller coaster in reverse. We did the drop first, and we’ve been climbing back to the top ever since,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.
Growth and value stocks seesawed for much of the week as market participants weighed spiking infections of the Covid-19 Delta variant against strong corporate results and signs of economic revival.
“There’s push and pull, there’s clearly conflict in the market,” Zaccarelli added. “There’s a strong difference of opinion as to whether the future’s bright or whether there are clouds on the horizon.”
Market participants now look toward next week with the Federal Reserve’s two-day monetary policy meeting and a series of high-profile earnings.
The Fed’s statement will be parsed for clues regarding the timeframe for tightening its accommodative policies, although Chairman Jerome Powell has repeatedly said the economy still needs the central bank’s full support.
The Dow Jones Industrial Average rose 238.2 points, or 0.68%, to 35,061.55, the S&P 500 gained 44.31 points, or 1.01%, to 4,411.79 and the Nasdaq Composite added 152.39 points, or 1.04%, to 14,836.99.
Second-quarter reporting season is in full swing, with 120 of the companies in the S&P 500 having reported. Of those, 88% have beaten consensus, according to Refinitiv. “We’re seeing companies, on average, beat on the top and on the bottom line,” Zaccarelli said. “We’re seeing the resilience of the consumer and that’s been the story of the earnings season so far.”
Analysts now expect aggregate year-on-year S&P 500 earnings growth of 78.1% for the April to June period, a sizeable increase from the 54% annual growth seen at the beginning of the quarter.
Chipmaker Intel Corp said late Thursday that it still faces supply constraints and provided disappointing guidance. Its stock fell 5.3%.
Moderna Inc jumped 7.8% after the European Union approved its Covid-19 vaccine for 12- to 17-year-olds. American Express Co gained 1.3% after posting second-quarter profit that handily beat expectations on the strength of a global recovery in consumer spending.
Other high-profile earnings expected next week include Tesla Inc, Apple Inc, Alphabet Inc, Microsoft Corp and Amazon.com.
Published in The Express Tribune, July 25th, 2021.
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