Stocks rocket to record highs as bets stick to Fed cutting rates

Technology shares propelled U.S. stocks to all-time highs after Alphabet posted strong results and a jump in gross domestic product failed to deter expectations that the Federal Reserve will cut rates next week. The euro traded at a two-year low.

The S & P 500 and Nasdaq Composite indexes hit fresh records as Twitter and Google-parent Alphabet rallied after their sales beat estimates, though Amazon slid on lower-than-forecast earnings. The second-quarter GDP report came in the wake of Thursday’s European Central Bank meeting, where Mario Draghi failed to deliver the dovish signals investors sought.

“Stocks are hitting all-time highs based on the fact that the GDP report was better than expected and earnings continue to come in better than expected,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.

“But you also can see that as rates continue to stay low, people are looking to the Fed to cut.”

Corporate results have largely buoyed stocks this earnings season, though investors continued to watch for any hints of a slowdown in the companies’ bottom lines.

Central banks remain at the top of the agenda, with policy-makers expected to boost stimulus at next week’s Fed meeting.

The yield on the benchmark 10year Treasury note finished the day little changed after briefly spiking following the GDP report.

“There’s nothing about this that would cause them to either not cut rates next week or to cut rates say by 50 basis points instead of 25,” said David Donabedian, chief investment officer of CIBC Private Wealth Management.

The Bloomberg Dollar Spot Index climbed as much as 0.2 per cent on the day after comments from White House adviser Larry Kudlow on CNBC that the U.S. has ruled out plans to intervene in foreign-exchange markets.

Elsewhere, Turkey’s lira strengthened a day after the central bank cut its key rate by the most on record. Most Asian benchmarks fell, but stocks in Shanghai bucked the trend.