Wall Street tiptoed to new highs on Friday for the S&P 500 and Nasdaq for the second time this week, as investors digested a day of mixed quarterly earnings and economic data.
The Dow rose 81.25 points, or 0.3%, to end at 26,543.33, while the S&P 500 index added 13.71 points, or 0.5%, to finish at 2,939.88. The Nasdaq Composite Index advanced 27.72 points, 0.3%, to close at 8,146.40.
For the week, the Dow fell 0.1% (blame the 3M sell off mid-week on a very poor quarterly report), the S&P 500 climbed 1.2% and the Nasdaq rallied 1.9%, its fifth weekly rise in a row.
The better than expected first quarter growth estimate of 3.2% took markets by surprise and saw analysts rethink their outlook for interest rates. But the way the GDP estimate was arrived at (boosted by the trade account as imports fell and a surge in unsold business stocks) but with very weak consumer spending, business investment and falling home construction – saw more questions raised about the quality of the growth.
US Treasury bond yields in fact eased by the close – the yield on 10 year securities dipping to 2.50% as traders saw no impact from the GDP figures on the thinking at the dovish Fed whose next policy meeting will be held on Tuesday and Wednesday of this week, with chair Jay Powell holding a media conference.
While earnings outperformance by the likes of Amazon and Facebook helped lift the wider market, the impact of surprisingly weak report from 3M mid-week lingered, as did several other reports.
For example, Tesla shares slumped 5% on Friday to its lowest in two years, with investors sceptical about the company’s future, its plans for self -driving cars and taxis and with a growing belief the company will need to raise more money.
That saw the shares fell 14% for the week to its lowest since January 2017. It was the worst weekly drop for Tesla since August last year, when CEO, Elon Musk said in an interview he was under major emotional stress.
Tesla’s $1.8 billion junk bond sank half a cent to yield 8.42%, more than 3 percentage points above the bond’s coupon rate of 5.3% the spread above the US treasury rate widened to 611 basis points, a sign of growing stress.
Chipmaker Intel Corp.’s shares slumped sharply and had its worst day in more than three years Friday after the chip giant cut its outlook for the quarter and year to “cautious” levels late Thursday.
Intel shares dropped 10.3% over the week ending Friday. The shares plunged 11% in early trading on Friday before steadying to be down 9% at the close, its biggest one day loss since January 2015.
In contrast to the slide in Tesla shares, Ford went from embattled, to resurgent with better than expected figures in its quarterly report late Thursday.
Amazon shares rose 2.5% after the company reported record profits for the first quarter late Thursday but American Airlines shares fell 1.1% after it cut its outlook for the rest of 2019.
Being the biggest airline in the US, this was seen as a warning for the rest of the industry because the reason given for the downgrade applies across the sector – the grounding of the Boeing 737 Maxx jets which has caused American to cancel hundreds of flights and find other aircraft.
