© Reuters. FILE PHOTO: Traders work at the New York Stock Exchange (NYSE) in New York City, US, June 22, 2023. REUTERS/Brendan McDiarmid
Written by Sruthi Shankar and Yohan M Cherian
(Reuters) – US stock index futures rose on Thursday, with bank stocks rising after major banks passed the Federal Reserve’s annual health test, while giant stocks extended gains as investors ignored hawkish messages from the central bank chief.
Shares of Bank of America (NYSE:), JPMorgan Chase (NYSE:), Goldman Sachs (NYSE:), and Wells Fargo (NYSE::) rose more than 1% in pre-market trading after banks passed the Federal Reserve’s annual test on Wednesday, showing they have enough capital to weather a severe recession.
Bank of New York Mellon (NYSE:) and Charles Schwab (NYSE:) is up nearly 2%.
“The market is relieved that the tests are conclusive,” said Thomas Hayes, Chairman of Great Hill Capital. “Banks passing with flying colors in what may be close to depressed conditions tell us that concerns about banks may have been overblown.”
The Dow and Dow closed lower on Wednesday after Federal Reserve Chairman Jerome Powell said he did not see inflation falling to the central bank’s target rate “this year or next” and that most policymakers expect the central bank will need to raise interest rates at the very least. twice more by the end of the year.
After the hawkish views, traders were seeking an 81.8% chance that the Fed will raise rates by 25 basis points to a range of 5.25%-5.50% at its July meeting, according to CME Group’s Fedwatch (NASDAQ:) instrument, up from 74.4% since week.
“Economic data continues to beat on most fronts, and it’s hard to see a scenario where one or two increases derail the economy. But the odds of the increases are much lower than Powell expects, so technology stocks benefit,” Hayes said.
Apple (NASDAQ) stock rose 0.3% after closing at a record high Thursday and approaching a market capitalization of $3 trillion.
Other high-growth stocks such as Tesla (NASDAQ:) and Nvidia (NASDAQ:) rose more than 1% each.
Investors await new data including the final reading of US first-quarter GDP and weekly jobless claims, due at 8:30 AM ET, to gauge interest rate expectations.
Investors will also analyze speeches by Powell and Atlanta Fed Chairman Rafael Bostick during the session.
On Friday, the Personal Consumption Expenditure (PCE), the Fed’s preferred measure of inflation, will be released for the month of May. Economists polled by Reuters expect core rates to hold steady at 4.7%.
At 7:35 AM EST, it was up 110 points, or 0.32%, up 14 points, or 0.32%, and up 58.75 points, or 0.39%.
Micron Technology (NASDAQ: ) rose 3.3% after the chipmaker beat estimates for third-quarter results, boosted by demand for its memory chips.
Occidental Petroleum (NYSE) advanced 1.3% after Berkshire Hathaway (NYSE:: Inc) said it had added more shares in the oil company, increasing its stake to more than 25%.
Salesforce (NYSE: ) rose 0.6% after the software company said it would invest $4 billion in its UK business in the next five years on artificial intelligence innovation.
