4:12pm: Nasdaq's volatility ends with little change
The Dow closed Thursday up 270 points, 0.8%, at 34,122, the Nasdaq Composite closed nearly exactly flat at 13,591 and the S&P 500 added 20 points, 0.5%, to 4,397. The small-cap Russell 2000 rose 22 points, 1.2%, to 1,880.
The DJIA was bolstered by strong performances in the banking sector all 23 institutions included in the Federal Reserve's annual stress passed. Shares of Wells Fargo, JPMorgan Chase and Goldman Sachs each rose more than 3%.
Meanwhile, the Nasdaq seesawed around the flatline. That volatility could extend into the second half of the year, according to Edward Jones senior investment strategist Mona Mahajan.
“Markets don’t go up in a straight line forever, and so, we wouldn’t be surprised to see some period of consolidation,” Mahajan said.
12:05pm: Big banks pass Fed’s stress test
US stocks were higher in noon trading after big banks passed the Federal Reserve’s annual stress test and a revised upward 1Q GDP print eased some recession fears.
At midday, the Dow rose 233 points to 34,085, while the S&P 500 added 16 points at 4,393 and the tech-heavy Nasdaq gained 14 points to 13,606.
“Sectors that do well when the economy is performing well are holding up today, but certainly the stress tests yesterday were another good sign that even if the economy softens, banks are much more resilient than what we saw back in the 2008 period,” Edward Jones senior investment strategist Mona Mahajan said.
Notable movers included shares of Overstock.com Inc, which surged 16% after the e-commerce home goods retailer revealed that it will rebrand itself as Bedbathandbeyond.com following the completion of its $21.5 million acquisition of Bed Bath & Beyond’s intellectual property and digital assets.
9:35am: 1Q GDP revised higher
The three major indexes were flat at the open as investors weighed up new economic data, including an upward revision to the US gross domestic product figures for the first quarter.
The government said the US economy grew 2% from January until March, significantly higher than its previous reading of 1.3% and the Street’s expectation of 1.4%.
Titan Asset Management head of trading and FX Alex Livingstone said the data release shows that the US economy is holding up well driven largely by stronger-than-expected personal consumption.
“All eyes will now be on the next FOMC decision at the end of July, as this latest growth data provides hawks with more ammunition in arguing for additional rate hikes to stamp out sticky inflation once and for all,” Livingstone said.
“Despite recent dampened volatility, this could throw more uncertainty into the mix to spice up what is otherwise a predominantly quieter time in markets.”
Meanwhile, initial jobless claims for last week unexpectedly fell to 239,000, down from 265,000 in the prior week and below the consensus expectation of 265,000.
Pantheon Macroeconomics chief economist Ian Shepherdson said there was no specific explanation for this sudden dip in unemployment claims, but observations for individual weeks need to be viewed with skepticism, especially when they move against the established trend in claims and other data.
“The rising trend in claims is consistent with the upshift in Challenger layoff announcement numbers and WARN notices of plant closures and mass layoffs, and we expect further increases in all three measures in the second half,” Shepherdson said.
Just after the opening bell in New York, the Dow Jones was trading at 33,852 points, the S&P 500 at 4,374 points, and the Nasdaq at 13,589 points.
7:45am: Powell's comments in focus
US stocks are expected to push higher on Thursday as the market approaches the end of the second quarter and the first half of 2023, with investors still mulling the path for future interest rate hikes after further comments from Federal Reserve chair Jerome Powell and ahead of more data releases.
In pre-market trading, futures for the Dow Jones Industrial Average (DJIA) were 0.3% higher, while those for the S&P 500 also added 0.3%, and contracts for the Nasdaq 100 rose 0.4%.
On Wednesday, the DJIA closed 0.2% lower, while the S&P 500 edged down 0.05%, but the Nasdaq Composite gained 0.3% as investors digested Powell’s latest comments about the tightening cycle.
Speaking at a forum sponsored by the European Central Bank in Portugal on Wednesday, Powell said that more restrictive policy is still to come as the Fed continues to fight inflation. This includes the prospect of interest rate hikes at consecutive meetings, he added.
At a conference in Madrid, Spain, early on Thursday morning, Powell reiterated that view, saying that with US inflation well above the Fed's 2% goal and a labor market that's still very tight, most of the central bank's policymakers expect they will need to raise interest rates at least twice more by year's end.
In remarks prepared for delivery to the Banco de Espana conference on financial stability that largely echoed his recent observations on the economy and the state of policy, Powell did not say when those rates hikes may come.
On the data front, investors will have - arguably - the most important piece of economic data for this week to digest, which are the US GDP quarter-on-quarter figures.
Naeem Aslam, chief investment officer at Zaye Capital Markets commented: "The number is expected to perform a little better in comparison to the previous reading (previous 1.3% and forecast 1.4%). A strong number will really lift sentiment in the market, as traders have been concerned about the hawkish commentary from the Fed Chairman, who has warned markets a few times already that more rate hikes are still on the table.
"However, we think that the time has come when the Fed will talk more and do less, as the general direction of inflation is right, and in the coming months we will see a further improvement in this number."
Traders will also keep an eye on the latest US weekly jobless claims and new home sales data, both also due to be released on Thursday.
On the corporate front, JPMorgan and Bank of America both gained more than 1% in after-hours trading as the country’s biggest lenders passed the Federal Reserve’s annual stress test.
And Micron Technology shares ticked up 3% in extended trading after the chipmaker posted revenue that came in higher than expected for its latest quarter, citing higher industry demand.