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End of Day Brief - Thursday July 29 - Dow and S&P make new highs

SP 5004419.15+18.51(0.42%)
10-yr Note -4/321.275
NYSEAdv 2243 Dec 1011 Vol 817.4 mln
NasdaqAdv 2377 Dec 1958 Vol 3.9 bln

Industry Watch

Strong: Energy, Materials, Financials, Consumer Discretionary
Weak: Communication Services

Moving the Market

-- S&P 500 and Dow set all-time highs but market closes off session highs

-- Better-than-expected earnings reports while Facebook (FB), PayPal (PYPL), and Merck (MRK) provided cautious outlooks

-- Advance estimate for Q2 GDP increased at an annual rate of 6.5% ( consensus +8.5%)

S&P 500 and Dow hit record highs

Dow +152.60 at 35083.53, Nasdaq +15.68 at 14778.25, S&P +18.51 at 4419.15

[BRIEFING.COM] The S&P 500 (+0.4%) and Dow Jones Industrial Average (+0.4%) set intraday record highs on Thursday amid strength in the cyclical stocks, although the market did close off session highs. The Nasdaq Composite increased just 0.1% while the Russell 2000 outperformed with a 0.7% gain.

The advance was supported by a confluence of factors: a delayed appreciation that the Fed remained committed to its dovish policy stance, earnings reports that generally exceeded expectations, advance Q2 GDP increasing at an annual rate of 6.5% ( consensus +8.5%) -- even if it missed expectations, and the Treasury confirming $100 payments for every newly vaccinated American.

There were some negatives, though. Facebook ($FB 358.32, -14.96, -4.0%), PayPal ($PYPL 283.17, -18.81, -6.2%), and Merck ($MRK 76.93, -1.40, -1.8%) issued cautious outlooks following their earnings reports. ($AMZN 3599.92, -30.40, -0.8%) traded lower ahead of its earnings report after the close. Robinhood ($HOOD 34.82, -3.18, -8.4%) dropped 8% in its public debut.

Arguably, the continued resiliency to selling interest at the index level played an influential role in attracting buyers on the fear of missing out on further gains. Nine of the 11 S&P 500 sectors finished in positive territory with some rotational activity favoring the cyclical groups.

The financials (+1.1%), materials (+1.1%), energy (+0.9%), and consumer discretionary (+0.9%) sectors each advanced around 1%, while the communication services (-0.9%) and real estate (-0.2%) sectors closed lower. FB weighed on the communication services sector with its 4% decline.

Tesla ($TSLA 677.35, +30.37, +4.7%) was a notable standout, rising 5% after the stock was double-upgraded to Buy from Sell at DZ Bank. Qualcomm ($QCOM 150.99, +8.55, +6.0%), MasterCard ($MA 388.81, +5.37, +1.4%), and Comcast ($CMCSA 58.11, +0.13, +0.2%) were some earnings winners.

U.S. Treasuries settled mixed and little changed in a tight-ranged session. The 2-yr yield decreased one basis point to 0.20% while the 10-yr yield increased one basis point to 1.27%. The U.S. Dollar Index decreased 0.5% to 91.90. WTI crude futures increased 1.7%, or $1.24, to $73.62/BBL.

Reviewing Thursday's economic data, which featured the advance Q2 GDP report:

  • The advance Q2 GDP report reflected the rebound effort in the U.S. economy from the pandemic. It showed real GDP increasing at an annual -- and robust -- rate of 6.5% ( consensus 8.5%), helped by an 11.8% increase in personal spending. The GDP Chain Deflator increased 6.0% ( consensus 5.4%) following a 4.3% increase in the first quarter.
    • The key takeaway from the report is the strength seen in personal spending, as consumers were flush with cash and pent-up demand. The U.S. economy, though, was also flush with higher prices. That is another key takeaway, although the Fed continues to assert that the high inflation is likely to be transitory.
  • Initial claims for the week ending July 24 decreased by 24,000 to 400,000 ( consensus 375,000) while continuing claims for the week ending July 17 increased by 7,000 to 3.269 million.
    • The key takeaway from the report is the elevated level of initial claims, which are still well above pre-pandemic levels and a contributing factor to the Fed's view that the labor market still has a ways to go on the recovery road.
  • Pending home sales decreased 1.9% m/m in June ( consensus +0.8%) following an upwardly revised 8.3% increase (from 8.0%) in May.

Looking ahead, investors will receive Personal Income and Spending data for June, PCE Prices for June, the Q2 Employment Cost Index, the Chicago PMI for July, and the final University of Michigan Index of Consumer Sentiment for July on Friday.

  • S&P 500 +17.7% YTD
  • Nasdaq Composite +14.7% YTD
  • Dow Jones Industrial Average +14.6% YTD
  • Russell 2000 +13.4% YTD

Source: (

Disclosure: I may trade in the ticker symbols mentioned, both long or short. My articles represent my personal opinion and analysis and should not be taken as investment advice. Readers should do their own research before making decisions to buy or sell securities. Trading and investing include risks, including loss of principal.

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