Candid reporter
The main indexes on Wall Street on Thursday were substantially higher, with the strength of financial stocks outweighing lingering concerns about the future of the Federal Reserve’s rate hike campaign.
Treasury yields rose after an upward revision of US economic growth prompted investors to consolidate their expectations for further increases in interest rates.
Approaching midday, the high-tech Nasdaq Composite Index (COMP. IND) He was higher 0.07% To 13,601.17 points, after swinging since the opening bell. S&P 500 (SP500) and Dow Stellar Index (DJI) clung to the winnings, with the ex up 0.32% To 4391.06 points and the last add 0.63% to 34,064.67 points.
The longer 10-year yield (US10Y) rose 14 basis points to 3.85% while the more rate-sensitive 2-year yield (US2Y) rose 16 basis points to 4.88%.
The three major indices ended mixed in the previous session, after Fed Chair Jerome Powell hinted that policymakers could raise interest rates in succession at the remaining meetings this year.
Earlier today, the US Commerce Department’s third estimate for first quarter GDP growth was revised significantly to +2% from +1.3% previously. The data indicated continued strength in the economy despite the Fed’s most aggressive policy tightening yet.
“Investors tend not to focus on revisions, even when revisions tend to get wilder,” warned Paul Donovan of UBS.
Moreover, the number of Americans filing first aid claims unexpectedly fell after hovering near its highest level since October 2021 for two weeks. The report indicated that the labor market remains resilient.
“Claims for jobless claims fell by 26k in the latest week to 239k, reversing all the moves over the previous three weeks,” said Michael Feroli of JPMorgan.
“During the period when claims were over 260,000, there were questions about the quality of the data, particularly with regard to fraudulent filings. There are questions this week about the seasonal adjustment, as the adjustment routine didn’t have much time to learn about the relatively new Juneteenth holiday. So extracting the signal From weekly claims data, always a tough job, it’s looking more complicated lately. It won’t get any clearer as the fourth company is retooled and equipped on the road,” Feroli added.
According to the CME FedWatch tool, the probability of a 25 basis point rate hike by the Fed at its meeting later this month has now jumped to nearly 87% from about 74% last week.
Financial stocks provided support for the markets on Thursday, with heavyweight names such as Goldman Sachs (GS), Wells Fargo (WFC) and JPMorgan (JPM) among the biggest gainers in the S&P 500 (SP500). The positive sentiment was driven by news from the Federal Reserve that all 23 banks had met minimum capital requirements under a hypothetical recession in recent stress tests.
Among other active stocks, Micron Technology (MU) erased a pre-market gain and subsequently pulled back despite positive reaction to its quarterly results and guidance.
