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U.S. stock markets closed higher on Thursday after a choppy session. Market participants were busy finding a clue regarding future path of the interest rate movement after the release of the Fed’s FOMC meeting minutes of February. Investors were also assessing mixed economic data. All three major stock indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.3% or 108.82 points to close at 33,153.91. At intraday low, the blue-chip index was down nearly 250 points. Notably, 21 components of the 30-stock index ended in positive territory and 9 in negative zone.
The tech-heavy Nasdaq Composite finished at 11,590.40 rising 0.7% due to strong performance of large-cap technology stocks. The S&P 500 advanced 0.5% to end at 4,012.32. Seven out of 11 broad sectors of the benchmark index closed in positive territory while four in negative zone.
The Real Estate Select Sector SPDR (XLRE), the Energy Select Sector SPDR (XLE) and the Technology Select Sector SPDR (XLK) surged 1%, 1.5% and 1.7%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was down 5.2% to 21.14. A total of 10.43 billion shares were traded on Thursday, lower than the last 20-session average of 11.59 billion. The S&P 500 posted seven new highs and three new low while the Nasdaq Composite recorded 59 new highs and 128 new lows.
Higher Rate Regime Likely to Extend
The fears of higher interest rate hikes were fueled following comments from St. Louis Federal Reserve President James Bullard. Last week, he said that he had proposed a 50-basis point rate hike in the Fed’s last meeting and such a hike could be expected in the March meeting. Bullard’s sentiments were echoed by Cleveland Fed President Loretta Mester, saying that she also supports a steeper rate hike in the next meeting, which further weighed on stocks.
On Feb 17, Federal Reserve Governor Michelle Bowman said “I think there’s a long way to go before we reach our 2% inflation objective and I think we’ll have to continue to raise the federal funds rate until we see a lot more progress on that.”
On Feb 22, in an interview with CNBC, Bullard said that going higher sooner would be more effective. Per Bullard, the terminal interest rate should be around 5.375% instead of 5.1% expected by the Fed earlier.
Economic Data
The Department of Commerce reported that the U.S. GDP for fourth-quarter 2022 grew 2.7% in its second estimate, a decline from 2.9% growth in first estimate. The consensus estimate was also for a growth of 2.9%.
Personal consumption expenditure, the largest driver of the U.S. economy, increased just 1.4% for the fourth-quarter 2022, due to a decline in purchases of long-lasting goods such as appliances and autos. This was partially offset by the rising inventory level in the form of nonresidential fixed investment.
The Department of Labor reported that weekly jobless claims decreased 3,000 to 192,000 for the week ended Feb 18, lower than the consensus estimate of 198,000. Previous week’s data was revised upward from 194,000 to 195,000. Continuing Claims (those who already received government benefit) for the week ended Feb 11, came in at 1.654 million — a decrease of 37,000 from downward revision of 1.691 million in the previous week.
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Stock Market News for Feb 24, 2023
U.S. stock markets closed higher on Thursday after a choppy session. Market participants were busy finding a clue regarding future path of the interest rate movement after the release of the Fed’s FOMC meeting minutes of February. Investors were also assessing mixed economic data. All three major stock indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.3% or 108.82 points to close at 33,153.91. At intraday low, the blue-chip index was down nearly 250 points. Notably, 21 components of the 30-stock index ended in positive territory and 9 in negative zone.
The major gainer of the index was Merck & Co. (MRK - Free Report) , shares of which gained 1.3%. Merck currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The tech-heavy Nasdaq Composite finished at 11,590.40 rising 0.7% due to strong performance of large-cap technology stocks. The S&P 500 advanced 0.5% to end at 4,012.32. Seven out of 11 broad sectors of the benchmark index closed in positive territory while four in negative zone.
The Real Estate Select Sector SPDR (XLRE), the Energy Select Sector SPDR (XLE) and the Technology Select Sector SPDR (XLK) surged 1%, 1.5% and 1.7%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was down 5.2% to 21.14. A total of 10.43 billion shares were traded on Thursday, lower than the last 20-session average of 11.59 billion. The S&P 500 posted seven new highs and three new low while the Nasdaq Composite recorded 59 new highs and 128 new lows.
Higher Rate Regime Likely to Extend
The fears of higher interest rate hikes were fueled following comments from St. Louis Federal Reserve President James Bullard. Last week, he said that he had proposed a 50-basis point rate hike in the Fed’s last meeting and such a hike could be expected in the March meeting. Bullard’s sentiments were echoed by Cleveland Fed President Loretta Mester, saying that she also supports a steeper rate hike in the next meeting, which further weighed on stocks.
On Feb 17, Federal Reserve Governor Michelle Bowman said “I think there’s a long way to go before we reach our 2% inflation objective and I think we’ll have to continue to raise the federal funds rate until we see a lot more progress on that.”
On Feb 22, in an interview with CNBC, Bullard said that going higher sooner would be more effective. Per Bullard, the terminal interest rate should be around 5.375% instead of 5.1% expected by the Fed earlier.
Economic Data
The Department of Commerce reported that the U.S. GDP for fourth-quarter 2022 grew 2.7% in its second estimate, a decline from 2.9% growth in first estimate. The consensus estimate was also for a growth of 2.9%.
Personal consumption expenditure, the largest driver of the U.S. economy, increased just 1.4% for the fourth-quarter 2022, due to a decline in purchases of long-lasting goods such as appliances and autos. This was partially offset by the rising inventory level in the form of nonresidential fixed investment.
The Department of Labor reported that weekly jobless claims decreased 3,000 to 192,000 for the week ended Feb 18, lower than the consensus estimate of 198,000. Previous week’s data was revised upward from 194,000 to 195,000. Continuing Claims (those who already received government benefit) for the week ended Feb 11, came in at 1.654 million — a decrease of 37,000 from downward revision of 1.691 million in the previous week.