US stocks: S&P 500 hits fresh record high as Google shares soar above $1,000

Expectations that the Federal Reserve will extend its stimulus policy in the wake of the political standoff in Washington drove US stocks higher on Friday, with the S&P 500 closing at a record high for the second straight session.

Robust earnings from Google, Morgan Stanley and others also lifted sentiment among investors who had been distracted by the high-stakes negotiations over reopening the government and extending its borrowing authority. That was finally resolved Wednesday night, temporarily at least, with lawmakers agreeing to reopen the government until Jan. 15 and lift the debt ceiling until Feb. 7.

Investors also cheered the positive data in China, which showed the world’s second-largest economy expanded by 7.8% year-on-year in the quarter ending Sept. 30, rebounding from a two-decade low of 7.5% in the previous three-month period.

"We've moved from the dysfunction of Washington to the reality of the global economy, and it looks pretty good," Ron Florance, deputy chief investment officer at Wells Fargo Private Bank, was quoted as saying.

The S&P 500 closed up 0.65 percent at 1,744.38, the Dow Jones Industrial Averaged finished 0.16 percent higher at 15,396.63 and the Nasdaq ended up 1.32 percent at 3,914.28.

Google soared above $1,000 a share to a new record high after reporting better-than-expected earnings for the third quarter on Thursday. The Internet search giant said revenue rose 12 percent from a year ago to $14.89 billion, while net profit increased to $2.97 billion from the year-ago $2.18 billion. On Friday, Google shares closed up 13.80% at $1,011.41.

Morgan Stanley swung to a net profit in the third quarter after its stock trading revenue soared more than 30 percent. The investment bank posted a higher-than-expected net profit of $888 million, compared with a loss of $1.01 billion a year earlier, while total revenue rose to $7.93 billion from $5.28 billion on the back of equities trading and its wealth management business.

“So far early in the earnings season I would have to say it’s better than average. Not great, but better than average. We’re at all-time highs, so the market is certainly seeing it that way,” said J.J. Kinahan, chief strategist at TD Ameritrade in Chicago.