A gauge of global stocks climbed on Friday as investors looked for a strongly dovish US Federal Reserve at its next meeting and as early returns on earnings season have come in better than anticipated.
On Wall Street, a gain of 1.06 per cent in Microsoft helped lift the Dow and kept the S&P 500 and Nasdaq slightly afloat as quarterly results topped expectations, powered by its cloud business.
Stocks received some modest follow-through to the plus side following Thursday’s late rally after two influential Federal Reserve officials - New York Fed President John Williams and Fed Board of Governors Vice Chair Richard Clarida - laid out the case for quick action by the central bank to support the US economy.
However, Williams’ comments were later walked back, with the New York Fed saying the speech was not about potential action at the upcoming meeting, reports Reuters.
That dialled back expectations to about 39 per cent for a rate cut of half a percentage point at the Fed’s July 30-31 meeting, according to CME’s FedWatch tool.
Markets see it as a certainty the Fed will cut rates by at least a quarter of a percentage point at the meeting.
Earnings expectations for the S&P 500 have been trending upward recently and show growth of 1.0 per cent for the second quarter, according to Refinitiv data.
As recently as Tuesday, earnings were expected to show a decline for the quarter.
The Dow Jones Industrial Average rose 85.45 points, or 0.31 per cent, to 27,308.42, the S&P 500 gained 2.13 points, or 0.07 per cent, to 2,997.24 and the Nasdaq Composite added 6.93 points, or 0.08 per cent, to 8,214.18.
European shares closed slightly higher, having given up early gains of as much as 0.7 per cent, as political turmoil weighed on Italian stocks.
The pan-European STOXX 600 index rose 0.12 per cent and MSCI’s gauge of stocks across the globe gained 0.33 per cent.
Despite Friday’s advance, MSCI’s index was poised to snap a six-week streak of gains.
The dollar index rose 0.33 per cent, with the euro down 0.46 per cent to $1.1223.
In oil markets, crude advanced but was off earlier highs after climbing roughly 2.0 per cent amid rising tensions between the United States and Iran after a senior Trump administration official said the US will destroy any Iranian drones that fly too close to its ships.
Prices pulled back, however, with Brent prices on track for their biggest weekly decline of the year and US crude on pace for its biggest weekly drop in two months.
US crude rose 0.81 per cent to $55.75 per barrel and Brent was last at $62.68, up 1.21 per cent on the day.