U.S. stocks climb as economic data bolster confidence ahead of Powell speech

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U.S. stocks advanced on Thursday with the main benchmarks headed for back-to-back gains following a batch of strong economic data as investors waited to hear from Federal Reserve Chairman Jerome Powell on Friday.

How stocks are trading
  • S&P 500 SPX, +0.58% rose 42 points, or 1%, to 4,183.
  • Dow Jones Industrial Average DJIA, +0.10% advanced 150 points, or 0.5%, to 33,116.
  • Nasdaq Composite COMP, +0.77% advanced 169 points, or 1.4%, to 12,600.

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.

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.

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

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 CRM, -6.75% were down nearly 7% while Snowflake SNOW, +20.02%, on the other hand, was up more than 16% after its numbers and forecasts were well-received.

Meanwhile, Tesla Inc. TSLA, -1.15% 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
How are other assets faring
  • Oil futures were steady with U.S. crude CL.1, -0.99% up just 0.1% to $94.96 a barrel.
  • The 10-year Treasury yield TMUBMUSD10Y, 3.079% was marginally lower at 3.108%.
  • The ICE Dollar index DXY, -0.16% fell 0.1% to 108.59, while gold GC00, +0.45% rose 0.4% to $1,767 an ounce.
  • Bitcoin BTCUSD, -0.74% advanced 1.8% to $21,746.
  • Asia markets got an added lift from the latest stimulus in China. Hong Kong’s Hang Seng HSI, +3.63% rose 3.6% and the Shanghai Composite SHCOMP, +0.97% climbed 1%. In Europe, the Euro Stoxx 600 SXXP, +0.35% was roughly flat.

This article was originally published by Marketwatch.com. Read the original article here.

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