U.S. stocks rose to record levels on Thursday as investors shrugged off economic data pointing slower-than-expected growth.
The Dow Jones Industrial Average gained 153.60 points, or 0.4%, to 35,084.53, while the S&P 500 climbed 0.4% to 4,419.15, both hitting their intraday records during the session. The tech-heavy Nasdaq Composite underperformed with a 0.1% gain to end at 14,778.26 amid a drop in Facebook and PayPal shares.
U.S. second-quarter gross domestic product accelerated 6.5% on an annualized basis, considerably less than the 8.4% Dow Jones estimate.
Meanwhile, a separate data point showed that 400,000 people filed initial claims for unemployment benefits for the week ended July 24. That level is nearly double the pre-pandemic norm and above a Dow Jones estimate of 385,000.
The disappointing GDP number “was due to a drop in inventories so nothing to be too concerned about,” said Craig Erlam, senior market analyst at Oanda. “Initial and continuing claims came in slightly higher than expected. That certainly justifies a more patient approach from the Fed though.”
Many investors were relieved that the Federal Reserve signaled no imminent plans for dialing back asset purchases. Fed Chairman Jerome Powell cautioned that although the economy is making progress toward its goals, it has a ways to go before the central bank would actually adjust its easy policies.
“We have some ground to cover on the labor market side,” Powell said. “I think we’re some way away from having had substantial further progress toward the maximum employment goal. I would want to see some strong job numbers.”
Shares of Robinhood started trading on the Nasdaq at $38 per share on Thursday, but the stock eventually closed its debut session more than 8% lower $34.82 per share.
PayPal and Facebook fell 6.2% and 4%, respectively, after warning of significant growth slowdown as they reported quarterly earnings.
Meanwhile, shares of Ford jumped 3.8% after the automobile company raised its 2021 outlook after reporting a surprise profit in the second quarter.
Amazon and Pinterest reported earnings after the bell Thursday.
“The market is understanding we are having a blowout quarter here compared to a year ago,” said Michael Reynolds, vice president of investment strategy at Glenmede. “What’s much more important this season is the guidance we’re getting on quarters ahead, as the economy settles out into what might be the new normal.”
The major averages are on track to end the month higher, with the S&P up 2.8% for July. The Nasdaq Composite and Dow are up nearly 1.9% and 1.7%, respectively.
On Wednesday, the Senate voted to advance a bipartisan infrastructure plan, which would put $550 billion into transportation, broadband and utilities.