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U.S. stock markets closed mostly higher on Thursday after major banks cleared the Fed’s annual stress test. Moreover, a series of strong economic data also boosted market participants’ confidence on risky assets like equities. The Dow rallied; the S&P 500 gained modestly while the Nasdaq Composite ended in red.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) climbed 0.8% or 269.76 points to close at 34,122.42. Notably, 22 components of the 30-stock index ended in positive territory, while eight in negative zone. The tech-heavy Nasdaq Composite finished at 13,591.33, dropping 0.4% due to weak performance of large-cap technology stocks.
The S&P 500 increased 0.5% to end at 4,396.44. Eight out of 11 broad sectors of the benchmark ended in positive territory while 3 finished in negative zone. The Materials Select Sector SPDR (XLB), the Energy Select Sector SPDR (XLE), the Financials Select Sector SPDR (XLF) and the Industrials Select Sector SPDR (XLI) advanced 1.3%, 1.2%, 1.7% and 1%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was up 0.8% to 13.54. A total of 9.65 billion shares were traded on Thursday, lower than the last 20-session average of 11.65 billion. Advancers outnumbered decliners on the NYSE by a 1.93-to-1 ratio. On Nasdaq, a 1.48-to-1 ratio favored advancing issues.
Major Banks Clear Stress Test
On Jun 28, all 23 leading banks cleared the Fed’s annual stress test. This implies, these banks will be able to successfully withstand a severe recession in near future without disrupting its lending activities to individuals and corporate. The banks were able to maintain minimum capital levels, despite $541 billion in projected losses for the group.
The Bureau of Economic Analysis reported in its third estimate that the U.S. economy grew at 2% in first-quarter of 2023. The first estimate was 1.1% and the second estimate was 1.3%. The consensus estimate was 1.5%. The U.S. GDP increased 2.6% in fourth-quarter 2022. The final figure of the first-quarter 2023 GDP eliminates the concerns of a large section of economists and financial researchers that may fall into a recession in near future.
Consumer spending (known as personal consumption expenditure), the largest component of the U.S. GDP, grew 4.25 in first-quarter 2023, marking its highest level since second quarter of 2021. Exports jumped 7.85 in the reported quarter in contrast to a decline of 3.7% in the previous quarter.
The PCE (personal consumption expenditure) inflation and core PCE Inflation (excluding volatile items like food and energy) climbed 4.1% and 4.9%, respectively. Corporate profits decreased $121.5 billion and current production cash flow decreased $0.6 billion in first-quarter 2023.
Economic Data
The Department of Labor reported that weekly jobless claims decreased by 26,000 to 239,000 for the week ended Jun 24, missing the consensus estimate of 265,000. The previous week’s data was revised upward by 1,000 to 265,000 from 264,000 reported earlier. The 4-week moving average was 257,500, an increase of 1,500 from the previous week's revised average.
Continuing claims — people who already received government unemployment benefit and run a week behind the headline number — came in at 1.742 million for the week ended Jun 17. This compares to a revised 1.761 million in the prior week. The 4-week moving average was 1,757,500, a decrease of 13,000 from the previous week's revised average.
The National Association of REALTORS reported that pending home sales fell 2.7% month-over-month in May. The consensus estimate was for a break-even. April’s data was revised downward to a decline of 0.4% from a break-even reported earlier.
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Stock Market News for Jun 30, 2023
U.S. stock markets closed mostly higher on Thursday after major banks cleared the Fed’s annual stress test. Moreover, a series of strong economic data also boosted market participants’ confidence on risky assets like equities. The Dow rallied; the S&P 500 gained modestly while the Nasdaq Composite ended in red.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) climbed 0.8% or 269.76 points to close at 34,122.42. Notably, 22 components of the 30-stock index ended in positive territory, while eight in negative zone. The tech-heavy Nasdaq Composite finished at 13,591.33, dropping 0.4% due to weak performance of large-cap technology stocks.
The S&P 500 increased 0.5% to end at 4,396.44. Eight out of 11 broad sectors of the benchmark ended in positive territory while 3 finished in negative zone. The Materials Select Sector SPDR (XLB), the Energy Select Sector SPDR (XLE), the Financials Select Sector SPDR (XLF) and the Industrials Select Sector SPDR (XLI) advanced 1.3%, 1.2%, 1.7% and 1%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was up 0.8% to 13.54. A total of 9.65 billion shares were traded on Thursday, lower than the last 20-session average of 11.65 billion. Advancers outnumbered decliners on the NYSE by a 1.93-to-1 ratio. On Nasdaq, a 1.48-to-1 ratio favored advancing issues.
Major Banks Clear Stress Test
On Jun 28, all 23 leading banks cleared the Fed’s annual stress test. This implies, these banks will be able to successfully withstand a severe recession in near future without disrupting its lending activities to individuals and corporate. The banks were able to maintain minimum capital levels, despite $541 billion in projected losses for the group.
Following the result, shares of banking behemoth like JPMorgan Chase & Co. (JPM - Free Report) , The Goldman Sachs Group Inc. (GS - Free Report) and Wells Fargo & C0. (WFC - Free Report) surged 3.5%, 3% and 4.5%, respectively. JPMorgan and Goldman Sachs currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
U.S. Economy Remains Strong
The Bureau of Economic Analysis reported in its third estimate that the U.S. economy grew at 2% in first-quarter of 2023. The first estimate was 1.1% and the second estimate was 1.3%. The consensus estimate was 1.5%. The U.S. GDP increased 2.6% in fourth-quarter 2022. The final figure of the first-quarter 2023 GDP eliminates the concerns of a large section of economists and financial researchers that may fall into a recession in near future.
Consumer spending (known as personal consumption expenditure), the largest component of the U.S. GDP, grew 4.25 in first-quarter 2023, marking its highest level since second quarter of 2021. Exports jumped 7.85 in the reported quarter in contrast to a decline of 3.7% in the previous quarter.
The PCE (personal consumption expenditure) inflation and core PCE Inflation (excluding volatile items like food and energy) climbed 4.1% and 4.9%, respectively. Corporate profits decreased $121.5 billion and current production cash flow decreased $0.6 billion in first-quarter 2023.
Economic Data
The Department of Labor reported that weekly jobless claims decreased by 26,000 to 239,000 for the week ended Jun 24, missing the consensus estimate of 265,000. The previous week’s data was revised upward by 1,000 to 265,000 from 264,000 reported earlier. The 4-week moving average was 257,500, an increase of 1,500 from the previous week's revised average.
Continuing claims — people who already received government unemployment benefit and run a week behind the headline number — came in at 1.742 million for the week ended Jun 17. This compares to a revised 1.761 million in the prior week. The 4-week moving average was 1,757,500, a decrease of 13,000 from the previous week's revised average.
The National Association of REALTORS reported that pending home sales fell 2.7% month-over-month in May. The consensus estimate was for a break-even. April’s data was revised downward to a decline of 0.4% from a break-even reported earlier.