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* U.S. Q2 GDP growth slows to 2.1%, but tops estimates
* Twitter gains after Q2 revenue beat
* Amazon falls after quarterly profit miss
* Alphabet surges on upbeat Q2 results
* Indexes up: Dow 0.15%, S&P 0.67%, Nasdaq 1.06% (Updates to early afternoon)
By Amy Caren Daniel
July 26 (Reuters) - Robust earnings from Google-parent Alphabet and Twitter took the S&P 500 and Nasdaq indexes to record highs on Friday, with support from data that showed the domestic economy slowed lesser than expected in the second quarter.
The Commerce Department said GDP increased at an annualized rate of 2.1% in the second quarter, higher than a 1.8% rate that economists polled by Reuters forecast.
“GDP growth was not fabulously good and not fabulously bad. It builds a case for the Fed to cut rates by 25 basis points and then sit on the sidelines for the remainder of this year,” Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.
The data comes on the heels of European Central Bank President Mario Draghi speech on Monday, which was less dovish than investors had anticipated and led the S&P 500 to post its first loss in the week.
Hopes that the Federal Reserve will cut rates at its policy meeting next week have powered a solid run in stocks this month, helping Wall Street scale record levels.
Two weeks into the second-quarter earnings season, about 75% of the 218 S&P 500 companies that have reported so far have topped profit estimates, according to Refinitiv data.
“It’s a tech-driven market, many of the names are able to grow earnings and revenue at a significant pace as they get deeper into the global economy and they continue to be the best place to be in, in the equity market,” Nolte said.
Alphabet Inc surged 10.3% after beating Wall Street targets on higher ad sales and touted growth at its cloud unit, a high-margin business it is leaning more on to drive growth.
Twitter Inc rose 8.9% after it posted better-than-expected second-quarter revenue and an uptick in daily users who see advertisements on the site.
Their upbeat earnings pushed the communication services sector up 3.17%, the most among S&P sectors.
At 12:12 p.m. ET, the Dow Jones Industrial Average was up 40.15 points, or 0.15%, at 27,181.13, the S&P 500 was up 20.02 points, or 0.67%, at 3,023.69. The Nasdaq Composite was up 87.50 points, or 1.06%, at 8,326.04.
Among other stocks, McDonald’s Corp jumped as much as 2.1% to hit a record high after beating quarterly sales expectations at established U.S. restaurants.
Amazon.com Inc fell 1.4% and was the biggest drag on the benchmark S&P 500 after the online retailer reported its first profit miss in two years and said income would slump in the current quarter.
Intel Corp reversed course to trade 0.5% lower. The chipmaker gave an upbeat current-quarter forecast and raised its full-year revenue guidance.
Advancing issues outnumbered decliners by a 1.88-to-1 ratio on the NYSE and by a 2.34-to-1 ratio on the Nasdaq.
The S&P index recorded 35 new 52-week highs and two new lows, while the Nasdaq recorded 95 new highs and 60 new lows. (Reporting by Amy Caren Daniel in Bengaluru; Editing by Saumyadeb Chakrabarty and Arun Koyyur)