Nasdaq Jumps To New Record High On Strength In The Tech Sector

(RTTNews) - Stocks moved mostly higher over the course of the trading day on Friday, rebounding following the weakness seen in the previous session. With the turnaround, the Nasdaq and the S&P 500 reached new record closing highs.

The major averages all closed in positive territory, although the Nasdaq posted a standout gain amid strength in the tech sector. The Nasdaq surged up 91.67 points or 1.1 percent to 8,330.21, while the S&P 500 climbed 22.19 points or 0.7 percent to 3,025.86 and the Dow rose 51.47 points or 0.2 percent to 27,192.45.

For the week, the Nasdaq and the S&P 500 jumped by 2.3 percent and 1.7 percent, respectively, but the narrower Dow inched up by just 0.1 percent.

The rally by the tech-heavy Nasdaq was partly due to spike by shares of Google parent Alphabet (GOOGL), which soared by 9.6 percent after the tech giant reported its second quarter results.

Alphabet beat analyst estimates on both the top and bottom lines and also announced a massive $25 billion share repurchase program.

Shares of Twitter (TWTR) also surged higher after the social media giant reported better than expected second quarter earnings, revenues, and daily users.

Fast food giant McDonald's (MCD) posted a more modest gain after reporting second quarter earnings that met expectations on stronger than expected same-store sales growth.

On the other hand, shares of Amazon (AMZN) moved to the downside after the online retail giant reported second quarter earnings that missed analyst estimates.

Semiconductor giant Intel (INTC) also turned lower despite reporting second quarter results that exceeded estimates and boosting its full-year guidance.

Traders were also reacting to a report from the Commerce Department showing U.S. economic growth slowed in the second quarter but still exceeded economist estimates.

The Commerce Department said real gross domestic product climbed by 2.1 percent in the second quarter following the 3.1 percent jump in the first quarter. Economists had expected the pace of GDP growth to slow to 1.9 percent.

The stronger than expected GDP growth reflected positive contributions from consumer spending, federal government spending, and state and local government spending.

Meanwhile, negative contributions from private inventory investment, exports, non-residential fixed investment and residential fixed investment limited the upside.

"Now in its longest expansion on record, the U.S. economy continues to look healthy," said Oxford Economics' Chief U.S. Economist Gregory Daco and U.S. Economist Jake McRobie.

They added, "However, given the persistent protectionist draft, the lingering policy uncertainty breeze, the sniffling global economy, and the cooling room temperature at home, now may be an opportune time for a Fed immunization shot."

Sector News

Tobacco stocks showed a substantial move to the upside on the day, driving the Dow Jones Tobacco Index up by 3.2 percent. The index rebounded strongly after ending the previous session at its lowest closing level in a month.

Significant strength also emerged among telecom stocks, as reflected by the 1.8 percent jump by the NYSE Arca North American Telecom Index.

Sprint (S) and T-Mobile (TMUS) helped lead the telecom sector higher after the Justice Department approved the $26 billion merger of the wireless giants.

Financial stocks also turned in a strong performance on the day, with the KBW Bank Index and the NYSE Arca Broker/Dealer Index climbing by 1.5 percent and 1.2 percent, respectively.

On the other hand, natural gas stocks extended the sell-off seen in the previous session, dragging the NYSE Arca Natural Gas Index down by 2 percent to a seven-month closing low.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region mover mostly lower during trading on Friday. Japan's Nikkei 225 Index fell by 0.5 percent, while Hong Kong's Hang Seng Index slid by 0.7 percent.

Meanwhile, the major European markets moved to the upside on the day. While the U.K.'s FTSE 100 Index advanced by 0.8 percent, the French CAC 40 Index and the German DAX Index rose by 0.6 percent and 0.5 percent, respectively.

In the bond market, treasuries have showed a lack of direction over the course of the session before closing roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 2.081 percent.

Looking Ahead

Earnings news may take a back seat next week as traders keep a close eye on the Federal Reserve's monetary policy announcement next Wednesday.

The Fed is widely expected to cut interest rates by at least 25 basis points, although recent economic data has generated some uncertainty about the outlook for rates.

The Labor Department's closely watched monthly jobs report is also likely to attract attention along with reports on consumer confidence, pending home sales, private sector employment, manufacturing activity, and the trade deficit.

On the earnings front, Merck (MRK), Pfizer (PFE), Procter & Gamble (PG), Apple (AAPL), General Electric (GE), Qualcomm (QCOM), General Motors (GM), Verizon (VZ), and Exxon Mobil (XOM) are among the companies due to report their quarterly results next week.