NASDAQ Leads U.S. Indexes In Monthly Gains

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Trading in U.S. equities was mixed on Friday, but all three major indexes posted monthly gains with the NASDAQ Composite (INDEXNASDAQ:.IXIC) leading the pack with its 6.6% rise in July. Positive second-quarter corporate earnings by technology companies played a major role in lifting the tech-weighed NASDAQ Composite.

The index was up 0.1% on Friday after adding 7.15 points to close the day at 5162.13. But so far in 2016, the performance of the NASDAQ has lagged that of the Dow Jones Industrial Average (INDEXDJX:.DJI) and the S&P 500 (INDEXSP:.INX).

The Dow rose 2.8% in July in a month that saw the blue-chip index register seven consecutive record closings. July 2016 saw the index post its best monthly performance since December 2014. The Dow pulled back 0.1% on Friday to close at 18432.24 after shedding 24.11 points and it was down 0.7% in the last week of July.

The S&P 500 rose 3.6% in July, but its performance was nearly flat in the last week of the month. The index gained 0.2% on Friday after adding 3.54 points to close at 2173.60. The S&P 500 also registered seven record closings in July.

Equity rally catalysts

Several catalysts played a role in the rally of U.S. equities in July. One of the catalysts was the bullish economic data that lifted investor sentiments that growth in the U.S. economic was peaking up pace. Labor, retail and housing data for the month of June either improved significantly compared to May or far exceeded the expectations of economists.

Investors also interpreted efforts by central banks to roll out monetary easing positively, in an attempt to fend off the possible economic troubles of Brexit. The Bank of England, the European Central and the Bank of Japan have also indicated that they still have options for additional stimulus measures should the need arise.

Although corporate earnings for the second quarter have been mixed, the decline in earnings of S&P 500 companies is expected to be smaller than previously estimated. Analysts expected earnings of companies in the broader index to fall 5.3%, but they now see earnings falling only 3.8% compared to a year earlier.

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