The stock market reached record levels on Thursday as strong earnings from major companies bolstered investor confidence.
The S&P 500 added 0.98% to close at a record high of 4,596.42, and the tech-heavy Nasdaq Composite jumped 1.39% to close at its own record of 15,448.12. The Nasdaq also notched an intraday record high. The Dow Jones Industrial Average rose 239.79 points, or 0.68%, to finish at 35,730.48, just under its all-time high.
Ford was a standout, as its shares jumped 8.7% for their best day of the year after reporting blockbuster earnings while also raising guidance. The automaker said increased availability of semiconductors during the quarter allowed it to ramp up production. Merck and Caterpillar also moved higher following earnings beats.
Shares of Apple and Amazon, which report after the bell on Thursday, rose 1.6% and 2.5% respectively to boost the Nasdaq. Shares of Tesla climbed 3.8%, continuing a strong stretch after last week’s earnings beat.
Nearly half of the S&P 500 has now reported third-quarter earnings, with a large majority delivering better-than-expected results.
“Earnings have helped and a reminder that US reporting so far has been better than the long-term average in terms of beats,” Jim Reid, head of thematic research at Deutsche Bank, said in a note. “It has still been healthier relative to some of the stagflationary gloom stories seen through September and early October which has perhaps helped the relief rally.”
Earnings season has seen some weak spots. Shares of Northrop Grumman and eBay were under pressure on Thursday after disappointing quarterly reports.
The move for stocks came despite a disappointing economic report on Thursday. GDP growth for the third-quarter came in at 2.0%, below the 2.8% expected. The reading marks a slowdown from 6.7% growth in the second quarter.
However, the third-quarter report captured much of the delta wave of Covid-19 that rolled through the U.S. but has since receded, leading some to believe it was a short-term slowdown.
“The key to the 3Q GDP report for markets, however, does not appear to be the slower growth rate as much as the timing: last summer. Stock prices today are more focused on this winter (and even next summer) than they are on what happened last summer — a well documented time early in the post-pandemic era,” Goldman Sachs managing director Chris Hussey said in a note to clients.
On a more positive note for the economy, weekly initial jobless claims came in at 281,000. Economists surveyed by Dow Jones were expecting 289,000 claims.
“I think we’re definitely back on track. We’ve seen the high frequency spending come in a lot more robust than we had expected,” said Andrew Smith, the chief investment strategist at Delos Capital Advisors.
Wall Street was also monitoring events in Washington, where Democrats and President Joe Biden appear to have reached a deal on a $1.75 trillion social spending bill. Negotiations over the bill have held up a vote on a separate infrastructure package.
With one trading day left in October, the Nasdaq has gained nearly 7% for the month. The S&P 500 has climbed 6.7% month to date, while the Dow has added added about 5.6%.