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U.S. Stocks Set for New Record Highs

07/27/2017 | 09:57 am

By Georgi Kantchev

Gains in technology shares pushed U.S. stocks further into record territory on Thursday.

The Dow Jones Industrial Average rose 37 points, or 0.2%, to 21748 shortly after the opening bell. The S&P 500 rose 0.2% and the Nasdaq Composite added 0.6%.

U.S. stock indexes have climbed to fresh records this week as a flurry of corporate earnings reports have largely pointed to continued strength among U.S. firms.

With second-quarter results in from nearly half of S&P 500 companies, the broader index is poised to report earnings growth of 9% from the year-earlier period, according to FactSet. That would build on gains from the first quarter, when U.S. companies reported their fastest earnings growth in nearly six years.

"Earnings are coming in above expectations, which is justifying the move up in equities," said Jeff Zipper, managing director at the Private Client Reserve of U.S. Bank, which has $145 billion under management. "At the same time, the weaker dollar is good for multinationals' bottom lines."

Elsewhere, the Stoxx Europe 600 was down less than 0.1% after fluctuating amid a flurry of earnings reports.

On Thursday, Royal Dutch Shell reported a sharp increase in cash flow from operating activities to $11.3 billion. Shell's shares gained 1.1%.

In South Korea, Samsung Electronics delivered its biggest-ever quarter of profit.

Deutsche Bank beat analysts' expectations in the second quarter, but revenue fell on the year in all three divisions of the German lender. Deutsche Bank shares were down 3.7%.

At the Fed, officials voted unanimously to leave rates unchanged and signaled that the central bank could start shrinking its balance sheet "relatively soon." But tweaks in the Fed's statement indicated that policy makers had grown more concerned about a recent slowdown in inflation.

"As long as the next Fed moves are well telegraphed, it shouldn't present a curveball for the market," Mr. Zipper said. "So far, that seems to be the case."

Investors see a roughly 47% chance of a rate rise by the end of 2017, according to Fed-fund futures tracked by CME Group.

The Wall Street Journal Dollar Index, which tracks the greenback against a basket of 16 currencies, was up 0.1%. The British pound hit its highest level since September against the dollar, rising 0.2% to $1.314.

Yields on 10-year Treasurys rose to 2.294% on Thursday from 2.285% the previous day, while German bund yields fell to 0.525%. Yields move inversely to prices.

In Asia, the Nikkei Stock Average gained 0.2% while Hong Kong's Hang Seng Index was up 0.8% at a 2-year high.

In commodities, oil prices were down, with Brent crude, the international benchmark, falling 0.5% to $50.85 a barrel. Gold was up 1.1%.

Ese Erheriene contributed to this article.

Write to Georgi Kantchev at georgi.kantchev@wsj.com

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