Dow rises more than 200 points as stocks head for a winning week
23 Jul 2021
Traders and financial professionals work on the floor of the New York Stock Exchange.
Drew Angerer | Getty Images
U.S. equities rose Friday, as the major averages tried to post their fourth straight day of gains, overcoming concerns about economic growth earlier in the week.
The Dow Jones Industrial Average gained 231 points, or 0.6%, gaining for a fourth-straight day. The S&P 500 rose 0.7%. The Nasdaq Composite climbed about 0.4%. The S&P 500 was on pace for a record close above the closing high set on July 12.
The 10-year Treasury yield rose on Friday to 1.285%, easing concerns about the economy that the bond market triggered on Monday. The 10-year yield fell to a 5-month low of 1.13% earlier this week.
“We expect markets to remain choppy, but a fundamental justification for more aggressive selling is missing,” wrote Barclays strategists in a note to clients. “In fact, the strong rebound since Tuesday shows animal spirits are intact.”
Strong earnings from tech stocks made investors optimistic ahead of reports next week from the biggest names in the sector. Twitter and Snap each jumped Thursday following better-than-expected second-quarter earnings reports. Twitter traded more than 1% higher, while Snap shot up 22%.
All three U.S. stock averages are on pace to close the week in the green, rebounding from last week’s losses and Monday’s sharp sell-off. The Dow dropped more than 700 points to start the week as yields fell, unnerving equity investors about the economy.
The S&P 500 is up more than 1% for the week and the Nasdaq Composite is up roughly 2%. Both are also within 1% of their intraday records. The Dow is up 0.8% for the week.
Strength in tech shares also comes with the continued spread of the highly contagious delta variant of Covid.
“We saw during the depths of the pandemic that tech stocks and their earnings held up the best, so I think a lot of investors are going back to the well, given we have a Covid resurgence,” Yung-Yu Ma, chief investment strategist at BMO Wealth Management, said. “Long term interest rates coming down as much as they have also makes those stocks more attractive.”
The stock market overall has been bolstered by a strong earnings reporting season. With a quarter of the S&P 500 having already reported, profit growth for the second quarter is expected to come in at 76%, according to Refinitiv, the best growth since 2009. And profit margins have been holding up in the face of rising inflation. So far for the second quarter, companies are reporting average profit margins of 12.8%, according to S&P Global, above the historic range.
American Express reported better than expected quarterly results Friday morning, giving its shares a 3.5% boost.
Honeywell also reported strong earnings, though its stock is down 1.5%. Shares of Kimberly-Clark are down 3% after reporting earnings in line with Wall Street forecasts. It also cut its forecast for the year, citing higher costs and lower volumes.