Dow Jones rises 200 points, stocks hit 6-week highs as investors shrug off weak GDP numbers

US stocks rose to their highest level in more than six weeks on Thursday as investors digested the second-quarter gross domestic product data as well as a string of corporate earnings reports and the latest interest rate hike from the Federal Reserve.

How are shares traded?
  • Dow Jones Industrial Average DJIA,
    + 1.20%
    It gained 213 points, or 0.6%, to 32,412 points.

  • S&P 500 SPX Index,
    + 1.26%
    Up 24 points, or 0.6%, at 4,049 points.

  • Nasdaq Composite,
    + 0.98%
    It rose 57 points, or 0.5%, to 12,090.

On Wednesday, the Dow Jones Industrial Average rose 436 points, or 1.37%, to 32,198, the S&P 500 increased 103 points, or 2.62%, to 4,024, and the Nasdaq Composite increased 470 points, or 4.06%, to 12,032. The Nasdaq, the best one-day percentage gain since April 6. 2020. Stocks rose sharply after the latest Fed rate hike, and comments from Federal Reserve Chairman Jerome Powell.

What is driving the markets

Stocks fluctuated between losses and modest gains on Thursday after the release of second-quarter GDP data which showed that the US economy contracted 0.9% between the beginning of April and the end of June. The data represented the second consecutive quarter of contraction after printing -1.6% for the first quarter of 2022. Stocks have recently been greeted with signs of a slowing economy with gains, as investors are betting that weak data could pressure the Fed to slow the pace of interest rates. walking long distances.

While economists polled by the Wall Street Journal had expected growth of 0.3%, the Federal Reserve in Atlanta expected a contraction of 1.2%, according to an update released Wednesday.

We see: US economy shrinks in the second quarter, GDP appears, calls for talk of recession

But Hugh Jimber, global market analyst at JPMorgan Asset Management, told MarketWatch in comments via email that markets are likely to be unfazed by the data because the reading doesn’t really tell us anything new about the state of the US economy.

“When is a recession not a recession? Two quarters of negative GDP growth has been squared, yet the US economy added 2.7 million jobs over the same period. While we may have to wait several months for a ruling from the National Bureau of Economic Research, it has It has been clear for some time that the US economy is losing momentum,” Jimber said.

Initial weekly jobless claims fell by 5,000 to 256,000 in the week ending July 23, according to the latest weekly reading of the number of Americans filing for unemployment benefits. However, the four-week average of new orders rose for the eighth consecutive week.

Some analysts said that a market turn higher does not necessarily mean that bullish buying in stocks will hold. Muhannad Aama, portfolio manager at Beam Capital, said the recent rally in the markets appears to be driven by a misinterpretation of Federal Reserve Chairman Jerome Powell’s comments.

Yesterday it was an overreaction and misreading of what Jerome Powell was trying to communicate. Ama said the lack of forward steering doesn’t mean we’re nearing a fulcrum, it just means there’s more uncertainty ahead.

The rally in stocks that started on Wednesday was partly driven by Powell saying that interest rates are now in neutral territory and that the pace of rises may slow, although he left another 75 basis point hike in September as a possibility.

We seeWas Powell, Chairman of the Federal Reserve, a pacifist or not? 4 key tips from Wednesday’s press conference

Corporate earnings were also an important driver for the markets this week, which is expected to be the busiest week in such reports for the entire quarter. meta pads meta,
-6.17%And the
The parent company of Facebook and Instagram released its quarterly report late Wednesday, showing worse-than-expected earnings and sales and a lower-than-expected revenue trend in the current quarter.

We see: Facebook’s revenue drops for the first time, and the Meta crash is expected to get worse

Looking ahead, earnings are due from Apple AAPL, Amazon AMZN and Mastercard MA after the market closed on Thursday.

Nearly 49% of the S&P 500 companies reported earnings through Thursday’s opening. FactSet data shows that 71.5% of those companies have exceeded estimates.

Companies in focus
  • Ford Motor Company
    F,
    + 5.27%
    Shares rose 4% after the automaker reported a more than 50% increase in total sales during the second quarter.

  • shares Stanley Black & Decker Co
    SWK,
    -13.97%
    It fell 12.1% after the toolmaker’s second-quarter earnings fell well below estimates.

  • Pfizer Inc
    PFE,
    + 0.99%
    Shares fell 1.1% even after the pharmaceutical giant reported big profits in the second quarter and outperformed revenue primarily driven by sales of its COVID drugs.

Other markets
  • West Texas Intermediate Crude Delivery September CL.1,
    -0.52%

    CLU22,
    -0.52%
    It fell 0.7% to $96.55.

  • GC00 gold,
    + 1.75%

    GCQ22,
    + 1.75%
    For October delivery, it gained $27.70, or 1.6%, to trade at $1,736.90 an ounce.

  • The ICE US Dollar Index rose 0.1% as the Japanese yen weakened after the latest Bank of Japan meeting.

  • Bitcoin BTCUSD,
    + 5.13%
    ETHUSD prices,
    + 7.77%
    It surged on Thursday, with bitcoin trading north at $23,000 and ethereum above $1,600.

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