Wall Street at record as data dulls rate hike chances

U.S. stocks were trading at record levels in early afternoon trading on Friday, as weak economic data dimmed chances of another rate hike this year and tech stocks gained.

A rise in Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL) lifted the S&P and the Nasdaq, with the technology index rising 0.63 percent.

However, tepid forecasts by JPMorgan and Wells Fargo capped gains.

Shares of JPMorgan (NYSE:JPM) fell 1.5 percent, Citigroup (NYSE:C) was down 1 percent and Wells Fargo (NYSE:WFC) fell 1.9 percent, despite their quarterly profits beating analysts' expectations.

The financial index .SPSY fell 0.92 percent and was the only laggard among the 11 major S&P sectors.

Bank of America (NYSE:BAC), Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) will report results next week.

"The bar for earnings is higher this time around, especially after the phenomenal growth we saw in the first quarter. So companies that miss expectations or guide down will be overly punished," said Michael Scanlon, portfolio manager at Manulife Asset Management.

Bank of America was the biggest drag on the S&P and Goldman Sachs shaved off 16 points from the Dow.

Analysts estimate second-quarter earnings for the S&P 500 companies rose 8.1 percent from a year earlier, after first quarter earnings posted their best performance since 2011, according to Thomson Reuters I/B/E/S.

Earnings will be closely watched to see if high valuations are justified in the face of tepid inflation and a recent patch of mixed economic data.

The S&P 500 has been trading at about 18 times earnings estimates for the next 12 months, compared with the long-term average of 15 times.

At 12:39 p.m. ET (1639 GMT), the Dow Jones Industrial Average was up 29.96 points, or 0.14 percent, at 21,583.05. It hit a record of 21596.13.

The S&P 500 was up 6.58 points, or 0.26 percent, at 2,454.41, slightly easing from its all-time high of 2455.43.

The Nasdaq Composite was up 25.56 points, or 0.41 percent, at 6,300.00.

Ten of the 11 major S&P sectors were higher, with defensive sectors such as real estate .SPLRCREC, utilities .SPLRCU and consumer staples .SPLRCS leading the advancers.

Data showed consumer prices were unchanged in June and retail sales fell for a second straight month, pointing to tame inflation and subdued expectations of strong economic growth in the second quarter.

Chances of a rate hike in December fell to 47 percent after the release of data points, from 55 percent at Thursday's close.

Earlier this week, Federal Reserve Chair Janet Yellen said future rate hikes could be gradual in the face of persistently low inflation.

Advancing issues outnumbered decliners on the NYSE by 2,015 to 793. On the Nasdaq, 1,533 issues rose and 1,217 fell.