By Damian J. Troise and Alex Veiga
Stocks on Wall Street bounced back from a two-day slide Thursday, placing the S&P 500 on pace for its second straight weekly gain.
The S&P 500 index rose 0.4%, powered by broad gains. About 77% of the stocks in the benchmark index closed higher. Technology stocks and banks made some of the biggest gains, along with a wide range of retailers and other consumer-oriented companies. Only communication services stocks and real estate companies fell.
The modest rally came as the latest government data showed continued economic growth and investors reviewed another batch of mostly positive corporate earnings reports.
Online brokerage Robinhood made an underwhelming debut on the Nasdaq, closing at $34.82, or 8.4% below its offering price of $38, which was the low end of its expected range.
The company has drawn millions of new investors to Wall Street with commission-free trades, but has also attracted controversy. It and other online brokerages rattled Wall Street earlier this year when investors used the platforms to drive up prices to seemingly unreasonable levels for “meme” stocks like GameStop.
The S&P 500 gained 18.51 points to 4,419.15. It is now less than 0.1% below the all-time high it hit on Monday. The Dow Jones Industrial Average rose 153.60 points, or 0.4%, to 35,084.53, while the Nasdaq added 15.68 points, or 0.1%, to 14,778.26. The Dow and Nasdaq also hovered just below their record highs set on Monday.
The yield on the 10-year Treasury note remained relatively stable. It edged higher to 1.27% from 1.26% late Wednesday.
A government report helped ease some concerns on Wall Street about the pace of the economic recovery. The Commerce Department said the U.S. economy grew at a solid 6.5% annual rate last quarter. The total size of the economy has now surpassed its pre-pandemic level. It also revised its figures for 2020, showing that the economy contracted by a slightly smaller amount than previously reported.
The latest GDP figure fell short of economists forecasts for 8.5% growth, but investors have largely brushed off the wide miss.
“That’s still an eyepopping number,” said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors, on the latest GDP figure.
Analysts have been expecting the economic recovery to slow from its breakneck pace earlier this year, but to remain steady as businesses reopen and people return to many of the things they were doing before the pandemic.
“Eventually the growth rates will slow, but it's important to understand that just because the rate is slowing doesn't mean we're entering into a contraction,” Horneman said.
Investors also got encouraging news on the broader employment picture, which has tended to lag the rest of the recovery. Claims for unemployment benefits dropped by 24,000 to 400,000 last week, the Labor Department reported.
The upbeat economic data follows the Federal Reserve’s statement on Wednesday signaling that it will keep its support for the economy intact.
Yum Brands, which owns KFC and Taco Bell, rose 6.3% after strong customer demand helped it handily beat Wall Street’s profit and revenue forecasts. Ford rose 3.8% after the automaker reported a surprise second-quarter profit on sales of its pickup trucks and SUVs.
Facebook fell 4% and weighed down the S&P 500's communications sector after it warned of slower growth through the rest of the year.
Amazon skidded 6.2% in extended trading after the internet retail giant reported mixed results for the second quarter after the market closed.
Updated on July 29, 2021, at 4:46 p.m. ET.