Wall Street ended the week on a record note on Friday with the solid belief the US Federal Reserve will reveal an interest rate cut of at least 0.25% on Thursday morning, Sydney time.
Helping with that belief was the stronger than forecast the first estimate of June quarter GDP – up to an annual 2.1% instead of a sub 2% reading. Solid consumer spending boosted GDP, more than offsetting a weakness in business investment.
While consumer spending rose by an annual 4.3% (up from an annual 1.1% in the first quarter), business investment fell 0.8%, the largest quarterly fall in three and a half years.
Good corporate earnings – especially revenues – in the current crop of June 30 reporting companies also added to the upbeat belief that all is good.
US shares rose 1.7% last week, Eurozone shares added 1.3%, Japanese shares rose 0.9% and Chinese shares were up 1.3%. While Australian shares slipped on Friday, they rose 1.4% through the week.
Besides the Fed meeting this week, there’s the July jobs data from the US to be released Friday night our time. If the Fed cuts rates the jobs report won’t impact sentiment.
US stocks closed at new highs for the S&P 500 and Nasdaq indexes on Friday.
The Dow ended up 51.47 points, or 0.2%, at 27,192.45, while the S&P 500 index closed up 22.19 points, or 0.7%, at 3,025.86. The Nasdaq jumped 91.67 points, or 1.1%, at 8,330.21.
For the week, the S&P 500 added 1.7%, the Nasdaq climbed 2.3% and the Dow edged up just 0.1%.
In addition to the all-time closing high, the S&P 500 saw a new intraday record at 3,027.98 as did the Nasdaq with a record intraday high at 8,339.64.
The S&P 500 has now made gains for six of the past eight weeks and has risen 20.7% for the year to date, while Nasdaq is up 25.5% so far in 2019.
So far in the current June 30 reporting season, 44% of S&P 500 index companies have reported quarterly earnings for the second quarter and 77% have posted a stronger-than-forecast profit, according to FactSet (See US earnings story).
