US stocks hit record highs as economy grows better than expected

Markets mostly rose on Friday.

The S&P 500 rose 0.7 percent to a record high and the STOXX Europe 600 rose 0.3 percent.

However, Asian markets were mixed, with the Shanghai Composite rising 0.2 percent but the Nikkei 225 falling 0.5 percent.

A report on Friday showed that the US economy grew at a 2.1 percent rate in the second quarter, better than economists expected.

US corporate results announced on Friday were also generally better than expected. Alphabet in particular jumped 9.6 percent after announcing a massive buyback programme.

Indeed, Blackstone chief investment strategist Joseph Zidle told CNBC that the Federal Reserve may not cut rates as much as many are expecting.

“Inflation is not nearly as weak as the market expects,” he said. “Economic growth is slowing, but I think we’re going to avoid a recession for a long time.”

Zidle added that that could lead to increased volatility due to a “rerating of risk assets”.

In contrast, Richard Bernstein Advisors portfolio strategist Dan Suzuki told CNBC that correction risks are rising because growth is slowing.

“When the Fed has historically cut rates, unless you had some kind of combined effort from the fiscal stimulus side of things, it’s been generally more of a bearish sign than it has a bullish sign,” said Suzuki.