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Dow Closes Above 35,000 for First Time as Strong Earnings Stoke Bullish Bets

Stock MarketsJul 23, 2021 21:22
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By Yasin Ebrahim – The Dow closed above 35,000 for the first time ever, led by a rally to record highs in shares of Google and Facebook following strong quarterly results from Twitter and Snap.    

The S&P 500 rose 1.01% to a closing record of 4,411.81. The Dow Jones Industrial Average gained 0.68%, or 238 points to close at 35,061, the Nasdaq gained 1.04% to 14,836.

Facebook (NASDAQ:FB) rallied 5% and Google-parent Alphabet (NASDAQ:GOOGL) gained nearly 4% to notch record highs ahead of their quarterly results due next week. The bid up in social media companies comes as better-than-expected quarterly results from Twitter and Snap pointed to a strong backdrop for advertising spending.

Twitter (NYSE:TWTR) rallied 3% after reporting revenue growth of 74% year-over-year, its fastest growth since 2017.

“[W]e are bullish on advertising momentum heading into 2H, led by strong demand across large advertisers, evidenced by 3Q guidance being 8% above Street expectations,” Oppenheimer said as it raised its price target on Twitter to $85 from $70.

Snap (NYSE:SNAP) jumped 24% as a ramp up in users and advertising revenue led to second-quarter results that beat analyses expectations on both the top and bottom lines.

Apple Inc (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Inc (NASDAQ:AMZN) were also in the ascendency ahead of their quarterly results due next week.  

Intel (NASDAQ:INTC), however, proved a drag on the semiconductor sector after the chipmaker reported results that topped Wall Street expectations, but guidance on quarterly revenue fell short of expectations, sending its shares more than 5% lower.

“[The] bears will question the increased magnitude of the implied decline in GMs [gross margins], while also pointing to concerns around PCs, with client computing group, needing to decline through the remainder of the year to offset the forecast pickup in data center group,” Wedbush said as it lowered its target price on Intel to $50 from $53.

Financials, meanwhile, were underperforming relative to broader market as banking stocks continued to be shunned despite a rise in yields.

American Express (NYSE:AXP), up 1%, outperformed relative to broader financials, following better-than-expected quarterly revenue and earnings. 

Concerns about the outlook on the economic recovery had sent yields spiraling earlier this week, with the 10-year falling below 1.14%.

Data released Friday, showing a rise in manufacturing activity, and weaker-than-expected services activity continued to muddy the outlook.

Energy was the sole sector in the red, paced by a decline in ConocoPhillips (NYSE:COP), though downside was limited by steading oil prices.

Looking ahead, corporate earnings as well as monetary policy will take center stage next week. The Federal Reserve kicks off its two-day meeting on Tuesday. 

"The Fed will not change course quickly at next week's meeting despite the high inflation rates," Commerzbank (DE:CBKG) said. However, it is likely to push ahead with preparations and possibly present some ensuing considerations."

Dow Closes Above 35,000 for First Time as Strong Earnings Stoke Bullish Bets

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