Banks Rise, Tech Slips As Dollar, Treasury Yields Jump On Stronger Data: What's Driving Markets Thursday

Thursday saw mixed reactions from U.S. stocks to better-than-expected jobs and GDP data, while the dollar and Treasury yields jumped on renewed expectations of a more aggressive Federal Reserve.

The U.S. real GDP printed 2% annual growth in the first quarter of the year, higher than the 1.3% estimated earlier. Weekly jobless claims fell to 239,000, well below expectations of 264,000. Fed Chair Jerome Powell today reaffirmed the need to raise borrowing costs again this year at a Banco de España Conference.

Cyclicals and value did better than defensive and growth, while financials were a bright spot as 23 large U.S. banks cleared the Fed’s stress tests on Wednesday.

Cues From Thursday's Trading:

The S&P 500 Index rose 0.3%, surging above 4,400 mark. The Dow Jones Industrial Average added 280 points, or 0.8%, while small-cap equities in the Russell 2000 Index rallied 1.2%.

The only major U.S. average in the red was the Nasdaq 100, down 0.3%.

U.S. Indices’ Performance on Thursday

Analyst Color:

As the first half of the year draws to a close, an analyst said inflation, monetary policy and banking issues will be on investor radars, as they assess the impact of these on lending and economic growth.

Chris Fasciano, portfolio manager at Commonwealth Financial Network, said the road ahead for equity markets calls for some caution. He also sees the geopolitical situation as a headwind.

"Given the diversion in potential outcomes, a portfolio balanced across the risk spectrum remains the best path forward for most investors," Fasciano said.

"It's important to remain focused on the underlying data — not the headlines — and react accordingly to take advantage of potential opportunities that may arise from any increased volatility."

Thursday’s Trading In Major US Equity ETFs: In midday trading on Thursday, the SPDR S&P 500 ETF Trust SPY rose 0.4% $438, the SPDR Dow Jones Industrial Average ETF DIA rose 0.8% to $341 and the Invesco QQQ Trust QQQ was 0.2% lower to $318.80, according to Benzinga Pro data.

Almost all U.S. equity sectors were positive, excluding the the Communication Services Select Sector SPDR Fund XLC, down 0.3%

The best performers were the the Financial Select Sector SPDR Fund XLF, up 1.7%, followed by the the Materials Select Sector SPDR Fund XLB, up 1.1%.

Latest Economic Data:

The Bureau of Economic Analysis reported 2% quarter-over-quarter GDP growth last quarter, upwardly revised from 1.3%.

The Labor Department released the weekly jobless claims for the past week, announcing a drop from 265,000 to 239,000, below market expectations of 265,000.

Atlantic Fed President Raphael Bostic, a member of the Federal Open Market Committee, will speak at 3 p.m. EDT.

Stocks In Focus:

• Lucid Group, Inc. LCID rose 7.4%, after rising 5% and 9% in the last two sessions, riding on bullish momentum.
• Wells Fargo & Company WFC, Goldman Sachs GS and JP Morgan Chase & Co. JPM were the best performing stocks of the S&P 500, up 4%, 3.3% and 3.2% respectively.
• BlackBerry Ltd. BB rose 10% after reporting better-than-expected quarterly results.
  Micron Technology, Inc. MU fell 4%, erasing prior gains, after Morningstar said China’s ban is relevant, with a potential headwind of at least 10% to revenue growth.
• Acuity Brands, Inc. AYI, McCormick & Co., Inc. MKC, Paychex, Inc. PAYX and Rite Aid Corp. RAD are the major names due to report quarterly results ahead of the market open.
• Among those reporting after the close are Nike, Inc. NKE and Progress Software PRGS.

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Commodities, Bonds, Other Global Equity Markets:

Crude oil rose 0.8%, with a barrel of WTI-grade crude trading at $69.80. The United States Oil Fund ETF USO was 0.7% higher to $63.  

Treasury yields spiked, with the 10-year yield up by 15 basis points to 3.86% and the two-year yield up by 17 basis points to 4.89%. The iShares 20+ Year Treasury Bond ETF TLT was 2% lower for the day. 

The dollar rose, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, up 0.3%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was 0.4% lower to 1.0873.

European equity indexes closed slightly in the green. The SPDR DJ Euro STOXX 50 Etf  FEZ was 0.1$ higher.

Gold ticked 0.1% higher to $1,910/oz. The SPDR Gold Trust GLD was flat at $177. Silver fell 0.4% to $22.6, while the iShares Silver Trust SLV fell 0.4% to $21. Bitcoin BTC/USD was 1.5% higher to $30,515.

Staff writer Piero Cingari updated this report midday Thursday. 

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