Optimism Returned to Wall Street as Investors Look Beyond Regional Bank Crisis

Barry Adams
30 Mar, 2023
New York City

Stocks opened higher as optimism returned to Wall Street and investors surmised that the worst of the regional banking crisis may be over. 

Major averages jumped as much as 1% in the early trading but steadily lost ground and treasury yields edged lower. 

Tech stocks led the gainers and mega cap tech leaders including Meta Platforms, Apple Inc, Netflix Inc, Amazon.com Inc and Tesla Inc advanced between 1% and 2%. 

Investors also reviewed the latest downward revision of the fourth quarter real GDP growth but noticed the core PCE Price Index remained elevated. 

 

Weekly Jobless Claims Advanced 

Weekly jobless claims increased by 7,000 to 198,000 for the week ending March 25, the U.S Department of Labor reported Thursday. 

The initial claims declined from the previous week's unrevised level of 191,000. 

The 4-week moving average increased 2,000 to 198,250 from the previous week's unrevised average of 196,250.

 

Real GDP Estimate Revised Lower In Fourth Quarter  

Real gross domestic product growth for the final quarter of 2022 was revised lower, according to the third and final estimate released by the U.S. Bureau of Economic Analysis Thursday. 

The U.S. economy expanded at an annual pace of 2.6% in the December quarter, slower than the previous estimate of 2.7% and 3.2% in the third quarter. 

Consumer spending increase was revised lower to 1.0% from the previous estimate of 1.4% and international 

Real GDP increased 2.1% in 2022, compared with an increase of 5.9% in 2021. 

The increase in real GDP in 2022 primarily reflected increases in consumer spending, exports, private inventory investment, and nonresidential fixed investment that were partly offset by decreases in residential fixed investment and federal government spending. 

Despite the cooling of energy prices and slowing of goods inflation, elevated inflation remains well anchored in the economy. 

The price index for gross domestic purchases increased 6.8% in 2022, compared with an increase of 4.2% in 2021. 

The PCE price index, a preferred measure of inflation by policy makers, increased 6.3%, compared with an increase of 4.0%. 

Excluding volatile food and energy prices, the core PCE price index increased 5.0%, compared with an increase of 3.5%.

The Federal Reserve has vowed to bring down inflation to 2% but despite the nine-rate hikes, prices are still rising at a faster pace than the Fed's preferred level.  

 

Indexes & Yields 

The S&P 500 index increased 0.4% to 4,042.67 and the Nasdaq Composite index rose 0.6% to 12,001.49. 

The yield on 2-year Treasury notes increased 4 basis points to 4.12%, 10-year Treasury notes advanced 4  basis points to 3.57% and 30-yearTreasury bonds  edged down 1 basis point to 3.77%. 

Crude oil advanced $1.05 to $74.05 a barrel and natural gas fell 7 cents to $2.10 a thermal unit. 

 

US Movers 

Bed Bath & Beyond Inc dropped 23.3% to 61 cents after the struggling home goods retailer filed to raise $300 million in stock offering but also raised the prospect of a bankruptcy filing. 

Evgo Inc soared 24.5% to $7.16 after the electric vehicle charging network company reported a surge in fourth quarter revenue and a rise in network throughput. 

AMC Entertainment Holdings Inc edged down 0.4% to $4.98 after surging more than 13% in the last three days of trading on a speculation that Amazon.com Inc may acquire the network of movie theater  operators. 

 Zebra Technologies Corp increased 3.1% to $305.33 after the mobile computing and scanning solutions provider announced a leadership change. 

The company appointed Joe White as new Chief Product & Solutions Officer, replacing Bill Burns who became the company's CEO earlier this month.