The S&P 500 Index rose 0.8%, to 2840.35, its fifth consecutive week of gains, while the Nasdaq Composite climbed 1%, to 7812.01 – breaking a two-week losing streak. The Dow Jones Industrial Average, with its large weightings in trade-sensitive stocks such as Caterpillar and Boeing, advanced just 11.5 points to close the week at 25,462.58. Consumer staple stocks and technology and real estate shares were particularly strong offsetting weakness in energy. Shares of Apple made headlines when it became the first U.S.-listed company in history to achieve a $1 trillion market capitalization on Thursday.
The economy performed as advertised in the second quarter, delivering a 4.1% increase in GDP on strength in consumer spending, exports and business investment. Such broad improvement more than offset slippage in home building. The underlying improvement in the economy looks sufficiently strong to keep GDP growing nicely in the second half. Still, the projected rate of growth is likely to be closer to 3% than 4%. Meanwhile, the Federal Reserve appears to be moving towards a more restrictive monetary approach. That’s even as it voted to keep interest rates unchanged at last week’s FOMC meeting.
Earnings are still forging ahead. Here, as well, the robust second quarter in which profit growth has so far eclipsed 20% over last year, could prove the high-water mark for this cycle as comparable results from a strong first half of the year will be hard to match going forward. This week we will hear from CVS Health, which should report second quarter adjusted profits of $1.61 per share up from last year’s $1.31.
Here is the answer to last week’s trivia question: Investment management provider Invesco was spun off from what company? State Street Corp., The Bank of New York Mellon, McGraw-Hill or Citizens & Southern National Bank. Answer: In 1978, Invesco – the provider of ETF PowerShares – was spun off from Atlanta’s Citizens & Southern National Bank.
Today’s Trivia Question: Which company posted the largest one-day loss in market value by any company in U.S. stock market history? Intel, ExxonMobil, Facebook or Berkshire Hathaway.