Nasdaq Moves Higher After Record, Broader Averages Slump

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The Nasdaq Composite notched another record high on Friday, though the broader averages fell as traders digested better-than-expected economic data, and a few second-quarter earnings results.

The Dow Jones Industrial Average was 33 points lower, or 0.19% to 18086. The S&P 500 shed 2 points, or 0.1% to 2126, while the Nasdaq Composite gained 46 points, or 0.9% to 5210.

Today’s Markets

The Nasdaq Composite kicked off the trading day touching a new lifetime high after closing the previous session at a record level. Google (GOOGL), which reported strong second-quarter results and an 11% increase in ad revenue after the bell Thursday, helped boost the index. The Internet giant’s shares continued to surge Friday, jumping as much as 13% in recent action.

Meanwhile, a full economic calendar helped round out a busy week on Wall Street as investors parsed economic data that came in above expectations.

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Data from the Commerce Department on the housing market showed that after dropping 10.2% in May, starts of new home construction in the U.S. rebounded in June, rising 9.8% to an annualized rate of 1.17 million units. The reading topped expectations calling for a rise to 1.11 million units. Meanwhile, permits to build new homes in June rose 7.4% to 1.34 million units, also surpassing forecasts for 1.15 million units.

Investors got a look at the latest reading of consumer price inflation from the Labor Department, which was in-line with analysts’ forecasts. Consumer prices rose 0.3% for the month, but when stripping out the volatile food and energy components, prices saw a 0.2% tick higher, which also matched expectations.

Barclays analysts said in a note that they view the increase as a “healthy pace” for the month.

“CPI inflation reported another strong increase in June as food, energy, and core component prices all made positive contributions…We continue to expect a moderate pick-up in core inflation this year, as a small drag from core goods inflation will likely be outweighed by a healthy rate of core services inflation,” the note read.

The most recent snapshot of consumer sentiment from a Thomson Reuters and the University of Michigan was out at 10 a.m. The gauge fell to 93.3 in July from a June reading of 96.1. Wall Street had expected it to hold steady.

Meanwhile, in the U.S., traders digested the latest quarterly results from General Electric (GE). The conglomerate revealed earnings per share of 31 cents, beating a 28-cent estimate. Revenue rose 1.5% to $32.75 billion.

Honeywell (HON) was also out with its quarterly results ahead of the bell. The company revealed a 9% increase in profit as its expenses dropped 7%. Still, the aerospace parts manufacturer noted that revenue fell about 5% to $9.78 billion.

Looking ahead to the second half of the year, Bob Doll, Nuveen Asset Management senior portfolio manager, said the landscape looks positive. He elaborated saying, considering all of the headwinds to the market, including Greece, China, and lowered earnings expectations, the market has does “really, really well” in the first half.

He assessed the first full week of earnings season that’s now under Wall Street’s belt, and told FOX Business Network’s Maria Bartiromo the outlook looks good.

“If we can get some earnings improvement, and I think we will… if the consumer spends a little more money, earnings expectations are a little low for the second half, it’ll be okay,” he said.

Meanwhile, focus didn’t stray too far from Greece and its debt problems a day after the Eurogroup gave agreement in principle to Greece's bailout. On Friday, Germany’s parliament granted approval to Greek emergency financial assistance, backing Chancellor Angela Merkel's stance that Greece needs a third bailout to help right its financial situation.

Giving Greece more financial aid has been a sticking point for the German people who have tended to hold the opinion the nation needs more structural reforms and tighter fiscal policy. 

After a vote by the Greek parliament earlier in the week, the nation has already begun to implement new tax increases with the hope that capital controls will be lifted soon, with the banks set to reopen on Monday after three weeks of closures.

Still, as Michael Gapen, chief U.S. economist at Barclyas pointed out in a note Friday, though progress has been made over the last week on financing Greece’s 7 billion euro bridge loan, there’s still a ways to go. 

“The events of the past week mean we no longer see a Greek exit as part of our baseline outlook, though the fluidity of the situation, uncertainty about the mechanics of bridge financing, implementation risk, and concerns about the health of the banking system, among other factors, suggest developments in Greece will remain a risk factor for some time,” he wrote.

Investors will be watching Monday’s deadline for Greece to make its ECB payment.

As the world keeps its focus in Germany, European markets were mostly flat. The Euro Stoxx 50, which tracks large-cap companies in the eurozone, fell 0.23% to 3668. Meanwhile, the German Dax fell 0.44% to 11665 the French CAC 40 was 0.01% higher to 5121, while the UK’s FTSE 100 slid 0.41% to 6768.

Elsewhere in the world, Asia markets also rallied to close out the week. China’s Shanghai Composite index added 3.51% to 3957. Hong Kong’s Hang Seng rallied 1% to 25415, snapping its four-week losing streak, while Japan’s Nikkei snapped its two-week losing streak, rising 0.25% to 20650.

In currencies, the euro fell 0.29% against the U.S. dollar. The yield on the benchmark 10-year U.S. Treasury note fell 0.003 of a percentage point to 2.35%. Bond yields move in the opposite direction of prices.

In commodities, Gold prices declined 1.08% to $1,131 a troy ounce, settling at its lowest value since April 2010.  

U.S. crude oil futures fell 0.04% to $50.89 a barrel. Brent, the international benchmark, was trading 0.18% higher to $57.02 a barrel.

On oil, Gapen said the investment bank’s commodities team doesn’t see prices going lower, but instead, reversing course.

“[They] see Brent moving gradually higher to an average of $68 a barrel in 2016 as non-OPEC supply declines or demand firms,” he wrote. “We believe any increase in Iranian oil supply is likely to be slow as sanctions relief is likely to take some time and Iran has a long list of items to address before Implementation Day.”