The robust economic data fueled expectations that the US central bank would maintain a tight monetary policy for a longer period. This sentiment was reinforced by hawkish comments from Fed Chair Jerome Powell. Traders were pricing in an 86.8% chance of a 25 basis points interest rate hike to the 5.25%-5.50% range at the July meeting, according to CME Group’s Fedwatch tool.
On Friday, the release of the Personal Consumption Expenditure index (PCE) for May, the Fed’s preferred inflation gauge, was awaited. Economists polled byIn New York, the Dow and the S&P 500 experienced gains on Thursday, driven by a rally in bank shares following major lenders clearing the Federal Reserve’s annual stress test. The positive performance was further supported by strong economic data, which increased expectations of further interest rate hikes by the central bank. The improved economic outlook also led to higher Treasury yields and a shift of investor focus towards economically sensitive sectors.
Despite concerns that the Federal Reserve would maintain higher interest rates for a longer period, some rate-sensitive growth sectors were avoided by buyers. However, the S&P 500 banks index surged by 2.6% and the KBW Regional Banking index rose by 1.8% after it was revealed that the largest US banks had sufficient capital to withstand a severe economic downturn.
The release of unexpected economic data added to the market optimism. The number of Americans filing new claims for unemployment benefits declined, and the US GDP for the first quarter was revised upwards to a 2.0% annualized rate from the previously reported 1.3% pace. This positive economic surprise led to a rise in yields, which in turn put downward pressure on technology and growth stocks while supporting value and cyclical sectors, according to the S&P 500 grew 19.58 points or 0.45% to close at 4,396.44, the Industrial Average increased by 269.76 points or 0.8% to reach 34,122.42, while the Nasdaq Composite had a minor decline of 0.42 points to settle at 13,591.33. The Russell 2000 index of small-cap stocks, which is sensitive to economic conditions, rose by 1.2%. The cyclical materials index was the second strongest performer among the S&P 500 sectors, finishing up 1.3%, following the financial sector’s 1.7% gain due to the banking rally. Reuters anticipated that core rates would remain steady at 4.7%.
The release of unexpected economic data added to the market optimism. The number of Americans filing new claims for unemployment benefits declined, and the US GDP for the first quarter was revised upwards to a 2.0% annualized rate from the previously reported 1.3% pace. This positive economic surprise led to a rise in yields, which in turn put downward pressure on technology and growth stocks while supporting value and cyclical sectors, according to the S&P 500 grew 19.58 points or 0.45% to close at 4,396.44, the Industrial Average increased by 269.76 points or 0.8% to reach 34,122.42, while the Nasdaq Composite had a minor decline of 0.42 points to settle at 13,591.33. The Russell 2000 index of small-cap stocks, which is sensitive to economic conditions, rose by 1.2%. The cyclical materials index was the second strongest performer among the S&P 500 sectors, finishing up 1.3%, following the financial sector’s 1.7% gain due to the banking rally. Reuters anticipated that core rates would remain steady at 4.7%.
Although the tech-heavy Nasdaq had recorded significant gains of over 29% in the first half of the year, the largest such increase in 40 years, it faced downward pressure on Thursday. Megacap stocks like Amazon, Meta Platform, Nvidia, and Microsoft contributed to the Nasdaq’s losses. The Philadelphia semiconductor index managed a small 0.13% gain but underperformed during the session, primarily due to a 4% decline in Micron Technology shares, despite the chipmaker surpassing third-quarter estimates.
Occidental Petroleum saw a 1.8% rise after Berkshire Hathaway Inc announced an increase in its stake in the oil firm, taking it above 25%. Sportswear maker Nike’s shares closed up 0.3% but experienced a slight decline after the bell, even though its financial report showed better-than-expected quarterly revenue, attributed to strong demand for sneakers like Air Jordan and LeBron 20.
Occidental Petroleum saw a 1.8% rise after Berkshire Hathaway Inc announced an increase in its stake in the oil firm, taking it above 25%. Sportswear maker Nike’s shares closed up 0.3% but experienced a slight decline after the bell, even though its financial report showed better-than-expected quarterly revenue, attributed to strong demand for sneakers like Air Jordan and LeBron 20.
Advancing issues outnumbered declining ones on the NYSE, with a ratio of 1.93-to-1, while on the Nasdaq, the ratio was 1.48-to-1 in favor of advancers. The S&P 500 recorded 44 new 52-week highs and 2 new lows, while the Nasdaq Composite registered 90 new highs and 90 new lows.
On US exchanges, approximately 9.65 billion shares were traded, lower than the 11.34 billion moving average for the previous 20 sessions.