Stock Market Today: Dow Hits 35K as Rally Leads to New Index Records

In reverse from last week, major market indices continued to recover from Monday’s sharp sell-off to close out at new record highs across the board on Friday.

Today’s gains were the result of mixed economic data. On the upside, IHS Markit’s Flash Purchasing Managers Index (PMI) hit a record high of 63.1 in July, with growth supported by an increase in new orders in the manufacturing sector.

On the negative side, the PMI for flash services has fallen to 59.8 since its June reading of 64.6, indicating that the growth rate in the service sector (including restaurants and hotels) has slowed due to “increases in supplier prices and a greater need to additional staff workers.”

Corporate earnings also took center stage, with stronger-than-expected results from names on social media Twitter (TWTR, +3.1%) and snap (SNAP, +23.8%) an improvement in the collective mood on Wall Street.

The Dow Jones Industrial Average finished 0.7% at 35,061, his first-ever close above 35K. “While there’s nothing special about milestone numbers, 35,000 is yet another reminder of how far we’ve come,” said Ryan Detrick, chief market strategist for LPL Financial. “This bull market is alive and kicking thanks to a very strong economy and record profits, justifying the current levels and likely higher prices going forward.”

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The S&P 500 Index and Nasdaq composite also established new record highs, gaining 1.0% to 4,411 and 1.0% to 14,836, respectively.

Other action at the fair today:

• The small cap Russell 2000 rose 0.2% to 2,209.
• Intel (INTC) was the worst stock in the Dow today, losing 5.3%. While the chipmaker reported higher-than-expected adjusted earnings and earnings for the second quarter, INTC issued cautious advice for the current quarter amid ongoing supply constraints.
• Boston beer (SAM) was another earnings loser today, falling 26.0% in the wake of the results. In the second quarter, the Sam Adams beer maker fell short both above and below the line, lowering its full-year forecast. “The hard seltzer category and the general beer industry were softer than we expected,” said Jim Koch, founder and chairman of SAM.
• US crude oil futures rose 0.2% to $72.07 a barrel.
• gold futuresfell 0.2% to settle at $1,801.80 an ounce.
• The CBOE Volatility Index (VIX) fell 2.8% to 17.20.
• Bitcoin fell 0.3% to $32,304.53. (Bitcoin trades 24 hours a day; the prices quoted here are from 4 p.m. each trading day.)

Time to work on that core

This week has been confusing for investors to say the least, as Monday’s deep sell-off over COVID concerns was quickly brushed aside over the following days.

“Monday’s storm passed quickly, but the key point is that the market’s focus has shifted from an inflation fear to a (short-term) growth fear,” said Douglas Porter, chief economist at BMO Capital Markets. “At least some concern on the growth front is certainly justified by the nerve-racking jump in virus cases in many regions, even if the market has apparently brushed aside such concerns.”

In other words, new record highs, while appreciated, don’t necessarily undermine the potential for additional volatility in the summer. With so many aspects of the recovery remaining uncertain, investors may want to consider moving to the core of their portfolio.

These inexpensive Vanguard exchange-traded funds (ETFs) and mutual funds, and our Kiplinger ETF 20, can help. All of these funds are among the cheapest in their class and offer a variety of strategies in a number of market areas.