Buoyed by some strong earnings reports from technology companies and a solid second-quarter GDP reading, stocks rallied Friday, pushing toward more all-time highs.
Economic growth in the U.S., the world’s largest economy, slowed to 2.1% in the April through June quarter, but that topped economists’ estimates calling for growth of 2%. That was a decent number, but still the lowest pace of economic growth since President Donald Trump took office.
Trump took to Twitter to encourage the Federal Reserve to lower interest rates, saying second-quarter growth would have been better if borrowing costs were lower.
“Personal consumption expenditures rose 4.3%, the best performance since the fourth quarter of 2017. Government consumption expenditures and gross investment rose 5%, the fastest pace since Q2 of 2009 as the economy was coming out of the Great Recession,” reports CNBC.
Fueled by a big post-earnings rally in shares of Google parent Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), the Nasdaq Composite jumped 1.11% today while the S&P 500 added 0.74%. The Dow Jones Industrial Average settled higher by 0.19%.
Offense Through Defense
In late trading, 18 of the Dow’s 30 components were in the green with about half those names higher by close to or more than 1%.
While it cannot be argued that more aggressive tech stocks powered the market higher today, several of the Dow’s top performers on Friday were highly defensive names. In fact, the top four Dow stocks in terms of percentage gains would fit the bill as “defensive.”
On light news flow, Coca-Cola (NYSE:KO), which reported earnings earlier this week, was the Dow’s top gainer today, adding 1.94%. The stock closed higher by about 4% this week. Earlier in the week, RBC analyst Nik Modi reiterated an “outperform” rating on the stock while upping his price target by $4 to $60, implying decent upside from Friday’s close.
On light volume and news, consumer products giant Procter & Gamble (NYSE:PG) climbed 1.73%. PG’s Friday gain could be a case of investors buying into the stock in advance of the July 30 earnings report. The company is expected to report a profit of $1.06 a share, up from 94 cents a year earlier.
Verizon Communications (NYSE:VZ), one of the Dow’s laggards this year, added 1.31% despite news that regulators are allowing T-Mobile’s (NASDAQ:TMUS) acquisition of Sprint (NYSE:S) to move forward. Those are the third- and fourth-largest wireless carriers in the U.S. Their marriage creates a larger No. 3 behind Verizon and AT&T (NYSE:T).
Dow Jones’ Repeat Offender
Among the Dow losers today were several names that have made repeat appearances on the offenders list. Boeing (NYSE:BA) and 3M (NYSE:MMM) are among them, but the index’s worst performer today was Dow (NYSE:DOW).
The chemicals producer slid 3.21% after a Bank of America research note out today said the stock is “stuck in neutral” and that pressure on the company’s profits is likely to linger into the first half of next year.
Dow Jones Today: Bottom Line
Next week could bring plenty of excitement with another Federal Reserve meeting on tap. The prevailing reaction to Friday’s GDP report was that while the number was a modest surprise, it was not so strong as to discourage the Fed from cutting rates.
On the earnings front, the week starting July 29 is another busy one with about 26% of the S&P 500 reporting. At the sector level, technology and healthcare, the S&P 500’s two largest sector weights, see about 30% of their components report. That is dwarfed by the 72.15% of energy companies reporting in the week ahead.
Todd Shriber does not own any of the aforementioned securities.