Stock Market Rose After Disappointing GDP Report – Barron’s

Hong Kong stocks continued to recover after being battered earlier in the week.

Anthony Wallace//AFP via Getty Images

U.S. stocks closed up Thursday, lifted by investors who decided to focus more on earnings and infrastructure rather than disappointing economic growth.

U.S. gross domestic product grew at a 6.5% clip in the second quarter, missing forecasts of 8.5%.

Still, Wall Street shrugged off the weaker-than-expected reading. The Dow Jones Industrial Average rose 153 points, or 0.45%. The S&P 500 edged up 0.4%, and Nasdaq Composite ticked 0.1% higher.

The disappointing reading comes one day after the Fed gave markets a muted message on monetary policy—that the central bank would keep watching economic growth. The central bank has signaled that it is considering a cut in its bond-buying, but hasn’t announced any plans to do so.

The U.S. also released its latest jobless claims data. Initial jobless claims for the week ended July 24 came in at 400,000, missing estimates of 380,000 but 24,000 fewer than the revised jobless claims level for the week ended July 17.

Investors seemed to be focused on earnings results and progress in the infrastructure bill. A bipartisan group of senators agreed Wednesday on a roughly $1 trillion spending plan and the Senate voted to begin work on the bill. The spending would create new jobs and provide some boost to economic growth.

A broad range of stocks lifted the major indexes, signifying some optimism on the health of the economy. About 78% of S&P 500 stocks were up, according to FactSet.

Industrials, which would benefit from increased infrastructure spending, were having a particularly strong day. The Industrial Select Sector SPDR Fund (XLI) was up 0.75%. “The long-awaited infrastructure deal in Congress …appeared to be brewing in late July, perhaps helping the Industrial sector,” writes Shawn Cruz, senior market strategist at TD Ameritrade. 

It was also another big day for companies to report their second-quarter earnings. Among those releasing results: Amazon, Royal Dutch Shell, T-Mobile, AstraZeneca, Mastercard, and Nokia. Fee-free trading platform Robinhood floated with an initial public offering price of $38 a share.

Facebook (FB) stock fell 4%, one day after the social media giant reported quarterly earnings of $3.61 a share, beating estimates of $3.03 a share, on sales of $29.08 billion, above expectations for $27.89 billion. 

Ford Motor Company (F) stock rose 3.7%, one day after reporting a profit of 13 cents a share, beating estimates for a loss of 3 cents a share. It posted sales of $24.1 billion for the latest quarter, below expectations for $24.2 billion. 

Uber Technologies (UBER) stock fell 3.1% on reports that SoftBank is planning to sell 45 million shares of the ride-hailing company to cover losses in Chinese ride-hailing company Didi. 

Chinese technology stocks, meanwhile, staged a recovery along with Hong Kong’s key index, as China made overtures to international investors after a massive selloff caused by regulatory crackdowns. 

Hong Kong’s Hang Seng rose 3.3%, further recouping this week’s losses from the index’s greatest fall since the beginning of the Covid-19 pandemic. The Shanghai Composite climbed 1.5%, while Tokyo’s Nikkei 225 edged 0.7% higher. The FTSE 100 in London lifted .9% as the pan-European Stoxx 600 moved up 0.5%. The CAC 40 in Paris was 0.4% higher and Frankfurt’s DAX moved 0.5% into the green.

One of China’s top regulators said the world’s second-largest economy wasn’t looking to decouple from capital markets after a regulatory crackdown caused intense volatility in stocks, The Wall Street Journal reported. Chinese stocks began to stage a recovery, with the country’s tech giants like Alibaba, Meituan, and Tencent notching near 10% gains.

“Regulatory interference has been behind the recent slump in China-related stocks and there have been growing fears this would lead to investors turning their backs on the growing number of Chinese companies listed in places like New York,” said Danni Hewson, an analyst at AJ Bell.

The vice chairman of China’s securities regulator, Fang Xinghai, met with representatives from Goldman Sachs, UBS, and others on Wednesday, according to the Journal report. Fang Xinghai’s message: recent pressure was focused on specific problems in select sectors, and that Beijing will consider market impacts before introducing future policies.

Write to Jack Denton at jack.denton@dowjones.com

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