US stocks rise as strong economic data bolsters sentiment ahead of Powell’s speech

U.S. stocks traded higher on Thursday with major benchmarks headed for extended gains as investors digested a batch of upbeat economic data.

How do stocks trade?
  • S&P 500 SPX,
    rose 32 points, or 0.8%, to 4,172.

  • Dow Jones Industrial Average DJIA,
    rose 84 points, or 0.3%, to 33,055.

  • Nasdaq Composite COMP,
    rose 132 points, or 1.1%, to 12,563.

On Wednesday, the Dow Jones Industrial Average DJIA,
The S&P 500 SPX rose 60 points, or 0.18%, to 32,969.
rose 12 points, or 0.29%, to 4141, and the Nasdaq Composite COMP,
gained 50 points, or 0.41%, to 12432. The S&P 500 is up 12.9% from its mid-June low, but remains down 13.1% for the year to date.

What drives the markets

U.S. stocks opened mostly higher on Thursday after revised readings on the performance of the U.S. and German economies in the second quarter, along with more fiscal stimulus from China.

A revised reading of second-quarter gross domestic product showed Germany’s economy grew 0.1 percent in the second quarter, which was better than economists had expected. Meanwhile, in the US, the first revision of GDP data for the second quarter showed the economy shrank just 0.6%, better than the 0.9% contraction from the initial reading.

I see: GDP shrank at an annual rate of 0.6% in the second quarter, but it wasn’t all bad news

The stock is also experiencing low trading volume. Just 8.8 billion shares traded on the various Wall Street exchanges in Wednesday’s session. That was the lowest volume so far this year and a 26% drop compared to the daily average for 2022, according to Dow Jones data.

Market strategists blamed low trading volume on seasonal factors, as well as the reluctance of some investors to make bold bets ahead of Fed Chairman Jay Powell’s speech on Friday at the Kansas City Fed’s annual economic symposium in Jackson Hole, Wyo.

Investors will analyze Powell’s comments for clues about the Fed’s policy direction, an issue that has largely determined the market’s trajectory of late.

“Markets have maintained a holding pattern, ahead of two important days that should provide further near-term guidance,” said Richard Hunter, head of markets at Interactive Investor.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said “the nervousness that swept through the indices earlier in the week has been kept at bay. The expectation that the Federal Reserve will keep interest rates on hold to reduce inflation has already been priced in to some extent.”

In other economic news, the number of Americans who filed for unemployment benefits last week fell to a one-month low of 243,000, indicating that job losses remain near record lows.

I see: Jobless claims fall to one-month low of 243,000 with no signs of rising layoffs

Investors were also treated to a decidedly mixed set of earnings reports from a handful of tech companies released after the closing bell on Wednesday. Shares in Nvidia
were flat while Salesforce
decreased by almost 7%. Snowflake
on the other hand, it rose more than 16% after the numbers and forecasts were well received.

In the meantime, Tesla Inc. Shares traded marginally lower, erasing their gains from the premarket session, as the stock split took effect at the open. The EV maker’s board of directors approved the 3-for-1 split on August 5.

How other assets work
  • Oil futures were flat with US crude CL.1,
    rose just 0.1% to $94.96 a barrel.

  • The yield on the 10-year Treasury TMUBMUSD10Y,
    was marginally lower at 3.108%.

  • The ICE DXY Dollar Index,
    fell 0.1% to 108.59, while gold GC00,
    rose 0.4% to $1,767 an ounce.

  • Bitcoin BTCUSD,
    rose 1.8% to $21,746.

  • Asian markets received an additional boost from the latest stimulus measures in China. Hang Seng HSI of Hong Kong,
    the Shanghai Composite SHCOMP also rose 3.6%,
    rose 1%. In Europe, the Euro Stoxx 600 SXXP,
    it was about level.

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