July 31, 2020 / 2:44 PM / 11 days ago

GLOBAL MARKETS-Wall Street cheers tech earnings but stocks drop on economic data, government gridlock

BOSTON, July 31 (Reuters) - A surge in technology stocks on Friday powered by blowout quarterly earnings was not enough to offset declines triggered by recent data showing a sharp contraction in U.S. economic performance and uncertainty about another government relief package.

The dollar rose but was still set for its worst month in a decade against a basket of currencies, amid abysmal economic data for the second quarter and expectations the U.S. Federal Reserve will maintain its ultra-loose monetary policy for years. .

Shares in Europe and Asia were mixed.

Apple Inc, Amazon.com, Alphabet Inc and Facebook Inc, whose combined market cap accounts for nearly one-fifth of the S&P 500, all delivered impressive quarterly results after-market on Thursday.

Edward Moya, a New York-based senior market analyst with trading firm OANDA, said the tech giants gave stocks “a nice boost.” But he noted more mixed results from energy companies like Exxon and Chevron and said the dollar would remain “a punching bag in the short-term” amid the coronavirus and U.S. government gridlock over stimulus.

The euro earlier in the day reached its highest in more than two years, set for its best month in a decade.

The Dow Jones Industrial Average fell 150.05 points, or 0.57%, to 26,163.6, the S&P 500 lost 7.57 points, or 0.23%, to 3,238.65 and the Nasdaq Composite added 49.44 points, or 0.47%, to 10,637.25.

The dollar index rose 0.095 point or 0.1 percent, to 93.116.

Crude oil recovered from an overnight slump, with U.S. crude rose 0.3% to $40.04 per barrel and Brent at $43.15, up 0.49% on the day.

U.S. government negotiations over another coronavirus relief bill continued, with a top lawmaker in the House of Representatives saying there was no sign of a deal between the White House and Democrats despite a federal jobless benefit set to expire on Friday.

European shares recovered from their lowest levels in a month, as investors looked past a severe economic contraction in the euro zone and on to company earnings.

The pan-European STOXX 600 rose 0.4%, though it was on course to end the month flat or lower.

U.S. gross domestic product plunged 32.9% in the second quarter, the biggest decline on record. Jobless claims rose last week, another sign the economic recovery has slowed.

Those figures overshadowed positive manufacturing data from China and Japan. China’s official Purchasing Manager’s Index data showed that factory activity grew in July for a fifth straight month and at a faster pace, defying expectations of a slowdown. Japan’s industrial output snapped four months of declines in June.

MSCI’s broadest index of Asian shares outside Japan fell 0.3%. Japan’s Nikkei dropped 2.82% as a stronger yen weighed on exporters. Chinese blue chips were last up 0.35% in a session that swung repeatedly between gains and losses.

MSCI’s All Country World Index, which tracks shares across 49 countries, fell 2.75 points or 0.5 percent, to 549.14.

Gold also turned higher, with spot gold prices rising $8.1292, or 0.41 percent, to $1,967.63 an ounce, just short of record highs set earlier in the week as bullion marched toward the $2,000 milestone.

U.S. benchmark 10-year Treasury notes fell 6/32 in price to yield 0.5592%, from 0.541% late on Thursday.

Reporting by Lawrence Delevingne in Boston and Ritvik Carvalho in London; Editing by Dan Grebler

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