The S&P 500 and the Nasdaq notched up record closes following splendid quarterly earnings from some of the major tech stocks. Meanwhile, the Dow pared gains due to losses for Chevron and Merck. Broader markets were also boosted after the third quarter GDP estimate of the U.S. economy came in above the consensus estimate. Further, benchmarks posted strong weekly gains.
The Dow Jones Industrial Average (DJIA) closed at 23,434.19, gaining 0.1%. The S&P 500 Index (INX) increased 0.8% to close at 2,581.07. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 6,701.26, increasing 2.2%. Advancing issues outnumbered decliners on the NYSE by a 1.53-to-1 ratio. On the Nasdaq, advancers outnumbered decliners by a 1.50-to-1 ratio. The CBOE VIX decreased about 9% to close at 10.28.
Impressive Tech Earnings Propel Broader Markets Higher
Impressive third quarter 2017 earnings by tech heavyweights such as Microsoft Corp. (MSFT – Free Report) , Alphabet Inc. (GOOGL – Free Report) , Amazon.com Inc. (AMZN – Free Report) and Intel Corp. (INTC – Free Report) boosted gains for the broader markets on Friday. This helped both the S&P 500 and the Nasdaq notch up record closes.
Shares of Microsoft surged 6.4% after posting first quarter fiscal 2018 results late Thursday. The company posted earnings of 84 cents per share and revenues of $24.5 billion. MSFT is up about 2% to $80.36 per share in trading shortly after its earnings report was released. (Read More)
Meanwhile, shares of Alphabet gained 1.3% after posting third quarter 2017 earnings. The company reported third-quarter diluted non-GAAP earnings of $9.57 exceeded the Zacks Consensus Estimate of $8.43. Also, earnings increased 91.0% sequentially and 32.0% year over year. The Internet powerhouse reported decent top-line numbers. (Read More)
Further, shares of Amazon rallied 13.2% after reporting third quarter 2017 earnings. The online retailer delivered a massive beat in its third-quarter 2017 results. Earnings per share of 52 cents beat the Zacks Consensus Estimate by 51 cents and were up 30% sequentially. Earnings were, however, flat year over year. (Read More)
Lastly, Intel rose 7.4% after reporting third quarter 2017 earnings late Thursday. The tech giant posted non-GAAP earnings of $1.01 per share, which beat the Zacks Consensus Estimate by 21 cents. The figure surged 26.3% from the year-ago quarter and 40.3% sequentially. The strong earnings growth was driven by better-than-expected top-line performance and operating margin expansion. (Read More)
Such splendid results led to gains for the S&P 500 as well as the Nasdaq. Of the 11 major sectors of the S&P 500, seven ended in the positive territory, with technology leading the advancers. The Technology Select Sector SPDR ETF (XLK) surged 2.7% to end at 62.54. Meanwhile, the Nasdaq amassed 144.5 points to post its best percentage gain since Nov 7, last year.
Dow Pares Gains
The Dow added 33.3 points to end in the positive territory as well. Such gains were buoyed a surge in the tech stocks with shares of Microsoft and Intel contributing to most of the gains.
However, the blue-chip index pared gains due to losses for Chevron Corp. (CVX – Free Report) and Merck & Co. (MRK – Free Report) , shares of which declined 4.1% and 6.1%, respectively.
Stronger U.S. Economy in Q3
According to the latest report from the Commerce Department, the U.S. economy improved at an impressive annual rate of 3%. This came in above the consensus estimate of 2.6%, however, below the second quarter figure of 3.1%. This also marked the first time since 2014 that the U.S. economy expanded at 3% annual pace for two consecutive quarters.
The report did not specify as to how much of an impact did hurricanes Harvey and Irma on the growth of the economy in Q3. Economists commented that the primary factor behind such a growth was an increase consumer spending, backed by broadly encouraging economic conditions and strong government outlays. Moreover, business investment increased 3.9%, the inventories rose 0.7% and the trade sector gained 0.4%.
For the week, the Dow, the S&P 500 and the Nasdaq increased 0.5%, 0.2% and 1.1%, respectively. This marked the seventh consecutive streak of weekly gains for both the Dow and the S&P 500 and the fifth week of gains for the Nasdaq. While this is the longest streak of weekly gains for the Dow since December last year, the S&P 500 has notched up its longest streak of weekly gains since late 2014.
General Electric (GE – Free Report) suffered its biggest one day dip in more than six years and weighed heavily on the broader markets. Meanwhile, the broader markets gained as market watchers remained hopeful that the new tax code would be signed into policy soon. Moreover, the House of Representatives cleared the budget blueprint with majority of the Republicans voting in favor of the move. Further, the ECB announced plans to extend the quantitative easing program.
Stocks That Made Headlines
Aaron’s Stock Falls on Q3 Earnings Miss, Revenues Beat
Aaron’s, Inc. (AAN – Free Report) incurred a negative earnings surprise of 20.4% in the third quarter of 2017, after five consecutive quarters of earnings beat.
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