U.S. stocks mostly higher as strong economic data lifts sentiment ahead of Powell speech

U.S. stocks traded mixed at the noon hour on Thursday with the S&P 500 and Nasdaq Composite headed for back-to-back gains following a batch of strong economic data as investors waited to hear from Federal Reserve Chairman Jerome Powell.

How stocks are trading
  • S&P 500
    rose 18 points, or 0.4%, to 4,158.

  • Dow Jones Industrial Average
    lost 3 points, or less than 0.1%, to 32,966.

  • Nasdaq Composite
    advanced 89 points, or 0.7%, to 12,520.

On Wednesday, the Dow Jones Industrial Average rose 60 points, or 0.18%, to 32969, the S&P 500 increased 12 points, or 0.29%, to 4141, and the Nasdaq Composite 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’s driving markets

U.S. stocks were mostly higher on Thursday following revised readings on the performance of the U.S. and German economies during the second quarter, along with news of more fiscal stimulus measures out of China. However, low trading volume was contributing to exaggerated swings intraday.

A revised reading on second-quarter gross domestic product showed Germany’s economy grew by 0.1% in the second quarter, which was better than economists had expected. Meanwhile, in the U.S., the first revision of second-quarter GDP figures showed the economy shrank by just 0.6%, better than the 0.9% contraction from the original reading.

See: GDP shrank at 0.6% annual pace in second quarter, but it wasn’t all bad news

Eric Diton, president and managing director at the Wealth Alliance, said U.S. stocks had good reason to celebrate the latest reading on second-quarter GDP.

“The underlying data is not showing a recession, and that’s pretty ideal for this market because this market is praying for a soft landing,” Diton said.

Stocks are also contending with low trading volume, which helped to exaggerate swings in the market. Wednesday’s session saw just 8.8 billion shares traded across the various Wall Street exchanges. That was the lowest volume so far this year and a decline of 26% compared with the daily average for 2022, according to Dow Jones data.

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

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

The market got another taste of Fed speak on Thursday when Philadelphia Fed President Patrick Harker said he would like to see the Fed hike its benchmark rate target north of 3.4% then let it “sit for a while”.

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

See: Jobless claims fall to one-month low of 243,000 with no sign of surging layoffs

Investors were also contending with a decidedly mixed bag of earnings reports from a handful of tech companies released after Wednesday’s closing bell. Shares in Salesforce
were down nearly 7% while Snowflake
on the other hand, was up more than 16% after its numbers and forecasts were well-received.

Meanwhile, Tesla Inc.
shares traded marginally lower, erasing their gains from the premarket session, as a stock split took effect at the open. The EV maker’s board approved the 3-for-1 split on Aug. 5.

Stocks in focus
  • Chinese stocks listed in the U.S. rallied following a Wall Street Journal report that U.S. and Chinese regulators are nearing an agreement to allow American auditors to travel to Hong Kong to inspect the record of Chinese firms listed in New York. Shares of Alibaba Group Holding Ltd.
    rallied more than 7%. Shares of iQiyi Inc.
    gained 6.9%, shares of  JD.com Inc.  
    Bilibili Inc. and and Huya Inc.
    each rose more than 8%. Shares of electric-vehicles company NIO Inc.
    gained more than 5%.

  • Shares of Peloton Interactive Inc.
    plunged nearly 20% after the company posted a sizable loss for its most recent quarter. A day ago, the stock rallied on news that the company would begin selling its products on Amazon.com.

  • Nvidia Corporation NVDA shares traded higher despite disappointing earnings released Wednesday night. Other semiconductor firms also benefited, with Advanced Micro Devices Inc. AMDand Micron Technology Inc. MUboth among the biggest gainers in the S&P 500 with gains of more than 4%.

  • NetApp Inc.,
    a provider of enterprise data, storage and cloud management, was up more than 6% after a strong earnings report.

  • Royal Caribbean Group
    and Norwegian Cruise Line Holdings
    were up 3.9% and 4.5%, respectively.

How are other assets faring
  • Oil futures were lower as U.S. crude
    dropped 1% to $94.96 a barrel.

  • The 10-year Treasury yield
    fell 2.9 basis points to 3.083%.

  • The ICE Dollar index
    fell 0.2% to 108.50, while gold
    rose 0.4% to $1,768 an ounce.

  • Bitcoin
    advanced 1.8% to $21,746.

  • Asia markets got an added lift from the latest stimulus in China. Hong Kong’s Hang Seng
    rose 3.6% and the Shanghai Composite
    climbed 1%. In Europe, the Euro Stoxx 600
    rose 0.4%.

— Jamie Chisholm contributed to this article.

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