US stocks rose to record levels on Thursday as investors shook off economic data pointing to slower-than-expected growth.
The Dow Jones Industrial Average rose 153.60 points, or 0.4%, to 35,084.53 while the S&P 500 climbed 0.4% to 4,419.15, both of which hit their intraday records during the session. The tech-heavy Nasdaq Composite underperformed, up 0.1%, ending at 14,778.26 amid a decline in Facebook and PayPal stocks.
US gross domestic product rose 6.5% on an annualized basis in the second quarter, well below the Dow Jones’ 8.4% estimate.
Meanwhile, a separate data point showed that 400,000 people were making initial claims for unemployment benefits for the week ending July 24. That level is almost double what it was before the pandemic and above a Dow Jones estimate of 385,000.
The disappointing GDP figure “was due to a decline in inventories so nothing to worry about,” said Craig Erlam, senior market analyst at Oanda. “Initial and continuation requests were slightly higher than expected. That certainly justifies a more patient approach by the Fed.”
Many investors were relieved that the US Federal Reserve did not signal any imminent plans to reverse its security purchases. Fed chairman Jerome Powell warned that while the economy was making headway toward its goals, there was still a way to go before the central bank would actually adjust its loose policies.
“We still have some work to do on the job side,” said Powell. “I think we are still a long way from having made significant progress towards the maximum employment target. I would like some strong employment figures.”
Robinhood’s shares began trading at $ 38 per share on the Nasdaq Thursday, but the stock eventually closed its debut session more than 8% lower than $ 34.82 per share.
PayPal and Facebook fell 6.2% and 4% respectively after warning of a significant slowdown in growth as they reported quarterly earnings.
Meanwhile, Ford’s shares rose 3.8% after the auto company raised its outlook for 2021 after reporting a surprise profit in the second quarter.
Amazon and Pinterest reported profits after Bell Thursday.
“The market understood that we had a bad quarter here compared to last year,” said Michael Reynolds, vice president of investment strategy at Glenmede. “What is far more important this season are the forecasts we get for the quarters ahead as the economy adjusts to the new normal.”
The major averages are on track to end the month higher, with the S&P up 2.8% for July. The Nasdaq Composite and the Dow are up nearly 1.9% and 1.7%, respectively.
On Wednesday, the Senate voted in favor of a bipartisan infrastructure plan that would put $ 550 billion in transport, broadband and utilities.