By Noel Randewich
(Reuters) - Robust earnings from Alphabet and Starbucks pushed the S&P 500 and Nasdaq indexes to record highs on Friday, with support from data showing U.S. economic growth slowed less than expected in the second quarter.
The U.S. Commerce Department said GDP increased at an annualised rate of 2.1% in the second quarter, higher than a 1.8% rate that economists polled by Reuters forecast.
The GDP data further solidified wide expectations that the U.S. Federal Reserve will cut 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 in New York. "It shows that the economy is slowing, but not nearly enough to raise any red flags."
The data comes on the heels of European Central Bank President Mario Draghi 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% of the 218 S&P 500 companies that have reported so far have topped profit estimates, according to Refinitiv data.
Their upbeat earnings pushed the S&P 500 communication services index <.SPLRCL> up 3.2%, the most among S&P sectors.
Lead negotiators for China and the United States are set to meet in Shanghai on Tuesday for two days in the next round of talks aimed at settling the U.S.-China trade war. The results of those talk will 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.
At 12:12 p.m. ET, the Dow Jones Industrial Average <.DJI> was up 40.15 points, or 0.15%, at 27,181.13, the S&P 500 <.SPX> was up 20.02 points, or 0.67%, at 3,023.69. The Nasdaq Composite <.IXIC> was up 87.50 points, or 1.06%, at 8,326.04.
Among other stocks, McDonald's Corp
Advancing issues outnumbered declining ones on the NYSE by a 1.89-to-1 ratio; on Nasdaq, a 2.43-to-1 ratio favored advancers.
The S&P 500 posted 36 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 100 new highs and 65 new lows.
(Additional reporting by Amy Caren Daniel in Bengaluru; Editing by Cynthia Osterman)
This story has not been edited by Firstpost staff and is generated by auto-feed.
Updated Date: Jul 27, 2019 04:05:40 IST