Stocks again set records as profit reports roll in

NEW YORK — U.S. stocks pushed to record heights Friday after strong profit reports from Google’s parent company, Twitter and other big corporations.

Companies are nearly halfway through the earnings reporting season, and results have generally been better than the dismal expectations that analysts had going into it. A government report Friday showed that U.S. economic growth slowed in the spring, but it was still better than economists expected.

All of the reports are emblematic of an economy that’s strengthening but that still is shadowed by concerns, which bolsters investors’ expectations for the Federal Reserve to cut interest rates at its meeting next week. It would be the first cut in more than a decade, when the Fed was trying to pull the economy out of a recession.

The S&P 500 index rose 22.19 points, or 0.7%, to 3,025.86 and surpassed the record it had set Wednesday. The Dow Jones industrial average gained 51.47, or 0.2%, to 27,192.45. The Nasdaq composite also set a record after jumping 91.67 points, or 1.1%, to 8,330.21.

Friday’s report on the U.S. economy showed that consumer spending remains strong, and employers continue to add jobs every month. But businesses are hesitant to invest, and manufacturing worldwide has slowed amid the U.S.’ trade disputes. Inflation also remains low.

Lower interest rates could boost economic activity and lead inflation higher. Investors also see a rate cut as a shot of adrenaline for stocks and other risky investments. The European Central Bank earlier this week held its key interest rate steady, but it made clear that more stimulus is on the way.

In the United States, investors think there’s virtually 100% certainty that the Fed will cut its benchmark shortterm rate on Wednesday, likely by a quarter of a percentage point from its current range of 2.25% to 2.5%.

“Any time you hit a record high, you ask: Is this justified?” said David Joy, chief market strategist at Ameriprise. “Well, it’s justified based on the easing cycle that central banks are on, and the absolute level of earnings helps. But growth is sluggish and moderating, earnings are flattish and we’ve got this overhang of, let’s call it geopolitical uncertainty. We say, ‘Let’s be a little cautious here.’”

If S&P 500 companies are able to report flat earnings growth for the second quarter, it would be counted by analysts as a small victory. Analysts went into this earnings-reporting season expecting a drop of roughly 3% in earnings per share for S&P 500 companies, according to FactSet.

So far this earnings season, about 44% of companies in the S&P 500 have already reported, and their earnings per share have been up a little more than 1% from year-ago levels.

Alphabet, Google’s parent company, soared to one of the biggest gains in the S&P 500 on Friday after it joined the list of companies reporting stronger-than-expected profits. It also allayed investors’ concerns about advertising trends after reporting stronger revenue growth than Wall Street forecast. Alphabet shares surged 9.6% for their best day in four years.

Twitter jumped 8.9% after it reported stronger user numbers and revenue for the second quarter than investors had expected. The big gains for Alphabet and Twitter meant stocks in the communications sector were the best performers in the S&P 500, up 3.2%. That was more than double the gain of any of the other 10 sectors that make up the index.

Shares of Sprint and TMobile US also jumped after the Justice Department approved their merger, despite fears that the deal could lead to higher prices and less competition for customers. Sprint rose 7.4%, and T-Mobile US gained 5.4%.

Treasury yields held relatively steady, as investors continue to settle on expectations for the Fed to cut the short-term rates by only a quarter of a percentage point next week, rather than the half-point cut that some investors were anticipating earlier.

The 10-year Treasury yield remained at 2.07%. The two-year yield, which is more influenced by the Fed’s movements, rose to 1.86% from 1.84% late Thursday.

In overseas markets, the French CAC 40 rose 0.6%, the German DAX gained 0.5%, and the FTSE 100 in London climbed 0.8%. Japan’s Nikkei 225 slipped 0.5%, the South Korean Kospi fell 0.4%, and the Hang Seng in Hong Kong lost 0.7%.

Benchmark U.S. oil rose 18 cents to settle at $56.20 a barrel. Brent crude, the international standard, rose 7 cents to $63.46 a barrel. Wholesale gasoline fell 1 cent to $1.87 per gallon. Heating oil declined 1 cent to $1.90 per gallon. Natural gas fell 7 cents to $2.17 per 1,000 cubic feet.