Tech Earnings Lift S&P 500 and Nasdaq 100 to Fresh Record Highs

The S&P 500 and Nasdaq 100 indices set fresh record highs as tech earnings improved, with Microsoft and Meta Platforms boosting their capital spending plans and investing in AI. The Dow Jones Industrials index was down 0.13%, while the US weekly initial unemployment claims rose 1,000 to 218,000. Consumer spending and inflation data was mixed, with the US Jun personal spending rising 0.3% m/m, but the core PCE price index rising 2.8% y/y.

The S&P 500 and Nasdaq 100 indices reached new record highs today, buoyed by robust earnings reports from major tech companies. Microsoft and Meta Platforms, in particular, led the charge, boosting their capital spending plans and pledging significant investments in artificial intelligence [1].

The S&P 500 Index ($SPX) rose by 0.57%, while the Dow Jones Industrials Index ($DOWI) gained 0.13%, and the Nasdaq 100 Index ($IUXX) increased by 0.48%. September E-mini S&P futures (ESU25) and September E-mini Nasdaq futures (NQU25) also moved higher, with gains of 0.50% and 0.41%, respectively [1].

The positive market sentiment was driven by strong earnings reports from Microsoft and Meta Platforms. Microsoft reported Q4 revenue of $76.44 billion, exceeding expectations of $73.89 billion, while Meta Platforms posted Q2 revenue of $47.53 billion, surpassing the consensus of $44.83 billion. Both companies raised their capital expenditure estimates, indicating a continued commitment to innovation and growth [1].

However, the Dow Jones Industrials index was weighed down by a 4% slide in UnitedHealth Group after Baird downgraded the stock to underperform from neutral [1]. Additionally, the US weekly initial unemployment claims rose by 1,000 to 218,000, reflecting a stronger labor market than expected [1].

Economic data was mixed, with US Jun personal spending rising by 0.3% m/m, but the core PCE price index, the Fed’s preferred inflation gauge, rising by 2.8% y/y. The US Jun personal income rose by 0.3% m/m, indicating a resilient labor market [1].

Looking ahead, the markets will focus on trade deal developments and the upcoming nonfarm payrolls report. Federal funds futures prices are discounting the chances for a -25 bp rate cut at the September 16-17 FOMC meeting [1].

References:
[1] https://www.barchart.com/story/news/33783538/s-p-500-and-nasdaq-100-set-fresh-record-highs-on-strong-tech-earnings