U.S. markets and stock exchange traded funds rose on Thursday as investors remained focused on the upbeat earnings season.
The Invesco S&P 500 Equal Weight ETF (RSP), which follows the S&P 500 Equal Weight Index (EWI), gained 1.0% on Thursday. Meanwhile, the S&P 500 was up 0.9%, the Dow Jones Industrial Average was 0.7% higher, and the Nasdaq Composite increased 1.3%.
“Earnings growth has been very strong,” Kiran Ganesh, multi-asset strategist at UBS Global Wealth Management, told the Wall Street Journal, adding that investors had also taken comfort from slow progress in Washington over new legislation that would hike taxes.
The better-than-expected earnings reports have helped lift the benchmark S&P 500 index and the Dow Jones Industrial Average to record highs this week, with analysts projecting S&P 500 company profits to rise 38.6% year-over-year for the third quarter.
“We are still favorable on US equities and don’t expect any near term reasons for the bullishness to fade which is led on by strong earnings,” James Gaul, portfolio manager at Knights of Columbus Asset Advisors, told Reuters. “There are supply chain issues affecting short-term results but there is anticipation for strong demand and supply issues subsiding going ahead, and for all major sectors the long term is attractive.”
The Commerce Department revealed that the U.S. economy expanded at a 2% annualized rate over the third quarter despite COVID-19 infections spiking, while another data set showed fewer new unemployment claims last week.
“Slower growth in Q3 was the result of a normalization of spending activity and the significant bottlenecks that remained… it will not dissuade the Fed from deciding on a gradual end to its bond purchases next week, given the good situation on the labor market and increasing price risks,” Bernd Weidensteiner, senior economist at Commerzbank, said in a note.
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