Wall Street climbed to new all-time highs on Friday, as soft economic data reinforced that the Federal Reserve will be in no rush to unwind its crisis-era stimulus.
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The Dow Jones Industrial Average gained 84.65 points, or 0.39%, to 21,637.74, its third straight record close. The S&P 500 increased 11.44 points, or 0.47%, to 2,459.27, the index’s 24th record close since Election Day. The Nasdaq Composite closed 38 points higher, or 0.61%, at 6,312.47.
The rally bucked a pair of downbeat reports on the economy. The consumer-price index was flat in June compared to the prior month, indicating no change to inflation. Thus far, inflation has fallen short of the Fed’s target of 2% growth this year.
Also, the Commerce Department said domestic retail sales dropped last month, while economists were looking for a small increase in spending.
Although the latest economic reports disappointed, investors likely viewed the news as another sign that Fed members could consider delaying the next interest rate hike or a plan to shrink the central bank’s portfolio. Chairwoman Janet Yellen recently said the Fed reserves the ability to reinvest, rather than relinquish its bond holdings, if it sees a deterioration in the U.S. economic outlook.
Investors also got their first look at bank earnings for the second quarter. JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C) each reported stronger profits as higher interest rates helped offset weaker trading revenue. However, JPMorgan lowered its earnings outlook for 2017. The nation’s largest bank now forecasts a $4 billion increase in net interest income, down from its earlier guidance of $4.5 billion.
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The profit warning weighed on financial stocks, the only S&P sector to post red ink on Friday. Shares of JPMorgan, Wells Fargo and Morgan Stanley (WFC) were down around 1%.
The 10-year Treasury yield slipped to 2.322% from 2.348%.
Nymex West Texas Intermediate oil advanced 46 cents, or 1%, to $46.54 a barrel. Brent crude, the international benchmark, was up 1% at $48.90 a barrel.
Elsewhere in economic data, U.S. industrial production ticked 0.4% higher in June to beat expectations for a 0.3% gain. Industrial production has improved for five consecutive months, reflecting a stronger manufacturing sector.