U.S. Stocks Add to Monthly Gain as Alphabet Rallies on Earnings

  • S&P 500 caps 5th monthly climb, longest streak since 2014
  • GDP rose 1.2 percent in second quarter, less than forecast

U.S. Stocks on Track to Post Monthly Gains

U.S. stocks edged higher, with the S&P 500 Index capping a fifth monthly gain, after data showing the American economy grew slower than forecast last quarter gave the Federal Reserve no reason to accelerate its time table for higher interest rates. Earnings from Alphabet Inc. boosted technology shares.

The S&P 500 rose 0.2 percent to 2,173.55 at 4 p.m. in New York, closing within two points of its record. The gauge climbed 3.6 percent in July. The Dow Jones Industrial Average fell 0.1 percent to 18,432, a fifth straight loss for the longest slide since June 15. The 30-stock index rose 2.8 percent in July, a sixth consecutive advance. The Nasdaq 100 Index rose 0.2 percent Friday, leaving it 7 percent higher in the month.

The U.S. economy stumbled in the first half of 2016 as companies retrenched, leaving consumers to shoulder the burden of sustaining growth heading into the presidential election. That didn’t deter equity gains, with the S&P 500 overcoming the longest stretch without a record outside of a bear market since 1985 as central banks signaled additional stimulus and corporate earnings topped estimates.

“The market seems to shed anything that would otherwise disrupt its desire to climb higher,” said Mark Luschini, chief investment strategist at Philadelphia-based Janney Montgomery Scott LLC, which manages $54 billion. “While these numbers are a little bit in hindsight, you have to at least take into account their momentum and see that the validation for the market is that the economic situation is going to be sufficiently decent to improve the earnings picture going forward.”

While the Federal Reserve earlier in the week held its rates unchanged as forecast, it reiterated its intention to raise rates only gradually. At the same time, the Bank of Japan on Friday damped expectations for looser policy by keeping its key monetary tools unchanged and saying it will mount a comprehensive review of its policy framework.

The GDP data come as investors sift through one of the busiest weeks of the earnings season. Halfway through, more than 80 percent of the S&P 500 companies that have reported so far beat profit projections and almost 60 percent topped sales estimates. Analysts have eased their expectations for a drop in second-quarter earnings to 4.5 percent.

Google parent Alphabet rose to the highest since December after its quarterly profit topped estimates. Amazon.com Inc. climbed after forecasting sales that may exceed analysts’ projections. Cigna Corp. declined after the health insurer reported quarterly earnings that missed estimates and cut its full-year forecast. Exxon Mobil Corp. and Chevron Corp. each retreated after results disappointed.

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