By Yasin Ebrahim
Investing.com – The S&P 500 climbed to a fresh record high Thursday, shrugging off disappointing second-quarter U.S. growth amid signs consumer spending remains healthy.
The rose 0.6% after hitting a record of 4,430.20. The gained 0.6%, or 215 points to a record of 25,171.52. The Nasdaq was up 0.3%.
Real gross domestic product grew at 6.5% annual rate in the second quarter, missing expectations for nearly 8.5% growth. But, a deeper look at the components of the growth gave plenty of reason for optimism as consumer spending topped expectations.
“The data was disappointing […] but the details were quite constructive,” Jefferies (NYSE:) said in a note. “Consumption was stronger than expected, rising by 11.8% annualized, and so was business investment, which rose 8%.”
The upside surprise in consumer spending offset weekly , supporting the economically-linked cyclical stocks including energy, materials and financials.
Energy was leading to the upside as oil prices climbed amid a fall in the dollar, though rising Covid-19 cases continue to muddy the outlook for energy demand.
Financials were boosted by jump in regional banking stocks even as Treasury yields lost momentum and slipped into the red.
Cincinnati Financial (NASDAQ:) was up more than 3% after reporting better-than-expected earnings.
Lower interest rates hurt the return on interest that banks earn from their loan products, or net interest margin – the difference between the interest income generated by banks and the amount of interest paid out to depositors.
In technology, Facebook (NASDAQ:) was down more than 3% after the social media giant warned that Apple’s privacy policies tweaks will weigh on advertising revenue.
“Management expects to see a significant slow down in y/y growth, and a moderate sequential decline in the two-year growth rates in 2H which is above our previous estimates but essentially in line with the current consensus, and a forecast less positive than peers, in our view. The forecast is partially being driven by headwinds from Apple’s ATT starting to have an impact,” Wedbush said in a note.
Other megacap tech stocks were in the ascendency. Google-parent Alphabet (NASDAQ:), Microsoft (NASDAQ:, Apple (NASDAQ:), were higher, while Amazon.com (NASDAQ:) fell.
Amazon.com is set to report second-quarter results after the closing bell Thursday.
A rise in chip stocks also supported the broader tech sector, led by gains in the Advanced Micro Devices (NASDAQ:) and Qualcomm.
Qualcomm (NASDAQ:) rose more than 3% after reporting quarterly results that topped analysts estimates, and the chipmaker delivered a positive outlook ahead amid expectations for easing supply chain woes.
The gains in the broader market come just a day after Federal Reserve chairman Jerome Powell hinted that the central bank tapering goal would need more time to assess the progress the economy has made toward the threshold to begin tapering bond purchases.
In other news, Robinhood Markets (NASDAQ:) fell 10% on its trading debut to trade below its initial public offering price of $38 a share.
Electric vehicle start-up Nikola Corp (NASDAQ:), meanwhile, slumped 7% after the company’s founder Trevor Milton was changed by Federal prosecutors with making false statements to drive up demand for the company’s stock.