Robust earnings from Alphabet Inc and Starbucks Corp on Friday pushed the S&P 500 and NASDAQ Composite indices to record highs, with support from data showing that US economic growth slowed less than expected in the second quarter of the year.
The US Department of Commerce said that GDP increased at an annualized rate of 2.1 percent in the second quarter, higher than a 1.8 percent rate forecast by economists polled by Reuters.
The GDP data further solidified wide expectations that the US Federal Reserve will cut interest rates at its policy meeting next week.
Those expectations have powered a solid run in stocks this month, helping Wall Street scale record levels.
“This is just what the market needed, not so soft that the economy is slowing down precipitously and not so strong that the Fed is going to reverse course,” said Art Hogan, chief market strategist at National Securities Corp in New York. “It shows that the economy is slowing, but not nearly enough to raise any red flags.”
The data came on the heels of European Central Bank President Mario Draghi’s speech on Monday, which was less dovish than investors had anticipated and led the S&P 500 to post its first loss in the week.
Two weeks into the second-quarter earnings season, about 75 percent of the 218 S&P 500 companies that have reported so far have topped profit estimates, Refinitiv data showed.
Starbucks rallied 8.9 percent to a record high after the world’s largest coffee chain posted its biggest same-store sales growth in three years.
Alphabet surged 9.6 percent after beating Wall Street targets on higher advertisement sales and growth at its cloud unit, a high-margin business it is leaning more on to drive expansion.
Twitter Inc rose 8.9 percent after it posted better-than-expected quarterly revenue and an uptick in daily users who see advertisements on the site.
Their upbeat earnings pushed the S&P 500 communication services index up 3.25 percent, the most among S&P sectors.
Lead negotiators for China and the US are set to meet in Shanghai on Tuesday for two days in the next round of talks aimed at settling the US-China trade dispute. The results of those talks would affect sentiment on Wall Street.
“Going forward, it’s very important not to have a breakdown in trade talks. And earnings reports need to continue to come in as they have been — a little better than expectations,” said Tom Martin, a senior portfolio manager at GlobAlt Investments in Atlanta, Georgia.
The Dow Jones Industrial Average on Friday rose 0.19 percent to end the week at 27,192.45 points, while the S&P 500 gained 0.74 percent to 3,025.86. The NASDAQ Composite added 1.11 percent to 8,330.21.
For the week, the S&P 500 added 1.7 percent, the NASDAQ climbed 2.3 percent and the Dow rose 0.1 percent.
Even under the cloud of uncertainty related to the trade conflict, the S&P 500 has risen 21 percent this year.
Also on Friday, McDonald’s Corp jumped as much as 2.1 percent, briefly hitting a record high after beating quarterly sales expectations at established US restaurants.
Amazon.com Inc fell 1.6 percent and was the biggest drag on the benchmark S&P 500 after the online retailer reported its first profit miss in two years and said income would slump this quarter.
Intel Corp lost 1.1 percent, even after the chipmaker gave an upbeat current-quarter forecast and raised its full-year revenue guidance.
Advancing issues outnumbered declining ones on the New York Stock Exchange by a 2.04-to-1 ratio; on NASDAQ, a 2.34-to-1 ratio favored advancers.
The S&P 500 posted 41 new 52-week highs and two new lows; the NASDAQ Composite recorded 111 new highs and 79 new lows.
Volume on US exchanges was 5.9 billion shares on Friday, compared with the 6.3 billion-share average for the full session over the past 20 trading days.
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