U.S. Stocks Finish Lackluster Session Mostly Higher

Following the mixed performance seen in the previous session, stocks once again turned in a relatively lackluster performance throughout much of the trading day on Thursday but managed to close mostly higher.

The Dow showed a notable advance, with the blue chip index climbing 269.76 points or 0.8 percent to 34,122.42 amid strong gains by financial giants JPMorgan (JPM) and Goldman Sachs (GS).

The S&P 500 also rose 19.58 points or 0.5 percent to 4,396.44, while the Nasdaq closed nearly unchanged, edging down 0.42 points or less than a tenth of a percent to 13,591.33.

The higher close on Wall Street partly reflected a positive reaction to the results of the Federal Reserve’s annual bank stress test.

The Fed said the results demonstrate that large banks are well positioned to weather a severe recession and continue to lend to households and businesses even during a severe recession.

“All 23 banks tested remained above their minimum capital requirements during the hypothetical recession, despite total projected losses of $541 billion,” the Fed said.

Meanwhile, traders were also reacting to another batch of largely upbeat U.S. economic data, which further eased recession worries but also renewed concerns about the outlook for interest rates

The Labor Department released a report showing an unexpected pullback by first-time claims for U.S. unemployment benefits in the week ended June 24th.

The report said initial jobless claims fell to 239,000, a decrease of 26,000 from the previous week’s revised level of 265,000. Economists had expected jobless claims to rise to 270,000 from the 264,000 originally reported for the previous week.

The upwardly revised figure for the previous week reflected the most jobless claims since the week ended October 23, 2021.

A separate report released by the Commerce Department showed the U.S. economy grew by much more than previously estimated in the first quarter of 2023.

The Commerce Department said gross domestic product jumped by 2.0 percent in the first quarter compared to the previously estimated 1.3 percent increase. Economists had expected the pace of GDP growth to be unrevised.

Sector News

Oil service stocks moved sharply higher over the course of the session, driving the Philadelphia Oil Service Index up by 2.0 percent to its best closing level in nearly two months.

The strength in the oil service sector came amid a continued increase by the price of crude oil, with crude for August delivery rising $0.30 to $69.86 a barrel.

Significant strength was also visible among steel stocks, as reflected by the 1.9 percent jump by the NYSE Arca Steel Index. The index also reached a two-month closing high.

Banking stocks also turned in a strong performance following the release of the stress test results, moving notably higher along with networking, brokerage and natural gas stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan’s Nikkei 225 Index inched up 0.1 percent, while China’s Shanghai Composite Index slipped by 0.2 percent.

The major European markets also finished the day mixed. While the French CAC 40 Index rose by 0.4 percent, the German DAX Index closed just below the unchanged line and the U.K.’s FTSE 100 Index fell by 0.4 percent.

In the bond market, treasuries moved sharply lower in reaction to the latest U.S. economic data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, surged 14.4 basis points to 3.854 percent.

Looking Ahead

Trading on Friday is likely to be driven by reaction to a report on personal income and spending in the month of May, which includes readings on inflation said to be preferred by the Federal Reserve.

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