Wall Street Rally Ignores Economic Data

The main indices of the New York Stock Exchange (NYSE) finished Thursday higher, despite a weaker than expected GDP growth numbers registered in the second quarter, as Wall Street investors seemed more optimistic about the Federal Reserve vowing to maintain the low-interest rates for the time being.

Accordingly, the Dow Jones Industrial Average and the S&P 500 indices reached intraday record highs before settling with average gains.

Moreover, earnings reports continue to provide traded with a positive sentiment, despite a mixed performance by some blue chips and other missing expectations.

The Dow finished higher by 153.60 points, or 0.4%, at 35,084.53 points, while the S&P 500 added 18.51 points, also 0.4%, to close at 4,419.15 points. Likewise, the tech-savvy Nasdaq Composite gained 15.68 points, or 0.1%, and closed at 14,778.26 points, maintaining support from the high earnings registered by tech giants.

One of the tech giants, Amazon.com, managed to post quarterly revenues of more than $100 billion for the third time in a row but failed to meet the high expectations, prompting concerns that a boom that resulted from a surge in demand due to the lockdown measures might be easing. This is evident by the slow in revenue growth in the second quarter of 2021 at an astonishing 27%, which remains much lower compared with the same period of 2020 when revenues posted a huge 41% year-on-year increase.

Amazon achieved a revenue of $113.08 billion in the second quarter of the year, missing the expected $115.2 billion, which led the company’s stock to fall by more than 6% before narrowing losses.

The United States’ Real Gross Domestic Product (GDP) expanded at an estimated annual rate of 6.5% in the second quarter of 2021, data by the U.S. Bureau of Economic Analysis showed on Thursday, missing an expected 8.5% growth rate.

Consumer spending provided huge support to Q2 growth, while lower government expenditure limited the overall expansion.

In addition, a decline in initial jobless claims might have limited the negative impact of the relatively disappointing GDP numbers. Last week, initial claims for unemployment benefits registered 400,000, however, this reading was also worse than the market expected but signaled an improvement.