Major Averages In Holding Pattern After Q1 GDP Revised Higher and Annual Bank Stress Test Results

Barry Adams
29 Jun, 2023
New York City

Major averages traded higher driven by gains in tech and bank stocks and investors reassessed the rate path after first quarter GDP was revised higher. 

Banks advanced after 23 largest banks passed the Federal Reserve's annual stress test. 

JP Morgan Chase and Wells Fargo are set to announce their revised plans for stock buybacks and dividends later in the day. 

Tech stocks continued to advance as markets approached the end of the second quarter and first half. 

Micron reported better-than-expected quarterly results, providing another boost to chipmakers in pre-market trading but stock eased off after regular trading hours commenced. 

In other economic news, initial claims of weekly jobless benefits for the week ending on June 24 declined 26,000 to 239,000. 

The decline in jobless claims indicated the ongoing tight market conditions, despite multiple rate hikes by the Federal Reserve. 

The four-week moving average of claims increased 1,500 to 257,500.  

 

First Quarter U.S. GDP Revised Higher 

In the third estimate, real U.S. economic growth was revised sharply higher to 2.0% from 1.3% in the previous estimate, the U.S. Census Bureau reported Thursday.  

In the fourth quarter of 2022, real GDP increased 2.6%. 

Higher consumer and public spending and exports contributed to the upward revision. 

Consumer spending growth rose to 4.2% from 3.8% in the previous estimate and exports increased 7.8% and imports advanced at a slower pace of 2%, resulting in higher net contribution of 0.58 percentage points. 

Nonresidential fixed investment growth was 0.6%, smaller than previously estimated 1.4%

The price index for gross domestic purchases increased 3.8% in the first quarter, the same as the previous estimate. 

The personal consumption expenditures (PCE) price index increased 4.1%, revised down 0.1 percentage point. 

The PCE price index excluding food and energy prices increased 4.9%, a downward revision of 0.1 percentage point.

After the release of the GDP data, U.S. Treasury yields advanced. 

 

U.S. Indexes & Yields 

The S&P 500 index decreased 0.1% to 4,373.44 and the Nasdaq Composite fell 0.2% to 13,579.28.  

The S&P 500 index advanced 4.7% in June and jumped 6.5% in the second quarter, third quarterly gain in a row. 

The yield on 2-year Treasury notes increased to 4.86%, 10-year Treasury notes inched higher to 3.79% and 30-year Treasury bonds edged up to 3.87%. 

Crude oil decreased $0.37 to $69.19 a barrel and natural gas prices decreased 3 cents to $2.63 a thermal unit. 

 

U.S. Stock Movers

Micron Technology Inc decreased 1.8% to $65.94 after the company reported quarterly results. 

Bank stocks were on the upswing after 23 largest banks passed the annual stress test conducted by the Federal Reserve. 

JP Morgan Chase increased 1.9% to $141.20, Wells Fargo advanced 2.9% to $41.83 and Bank of America Corp jumped 2.4% to $28.75. 

Joby Aviation Inc soared 28% to $11.22 after the electric vehicle aviation company confirmed a $100 million investment from an existing investor SK Telecom. 

On Wednesday, Job's stock jumped more than 38% after the company received permission to test its electric vehicle landing and takeoff. 

Occidental Petroleum increased 1.6% to $58.37 after Berkshire Hathaway acquired 2.1 million more shares in the company between June 26 and 28, according to a regulatory filing. 

After the purchase, Berkshire Hathaway's stake in the company rose to 25%. 

Overstock.com Inc increased 13.5% to $29.15 after the company said it completed the purchase of the Bed Bath & Beyond brand out of bankruptcy.