Nasdaq Soars, Meta Rallies, Dow Flirts With Record Streak and Oil Jumps To $80: What's Driving Markets Thursday?

Investor risk sentiment soared the day after the Federal Reserve’s interest rate decision, with technology companies leading gains.

Meta Platforms, Inc. META rocketed 7% on better-than-expected quarterly earnings, while among the large tech companies, only Microsoft Corp. MSFT registered a slight negative performance, down 0.7%. Meanwhile, the Dow Jones Industrial Average is marginally higher, battling with the fourteenth consecutive profitable session, a record not seen during the postwar period.

The U.S. economy grew at a rate of 2.4% in the second quarter, accelerating from the 2% in the previous quarter and significantly surpassing the estimates of 1.8%. Crude oil prices continued to rise, with WTI reaching $80 per barrel, the highest level since April 19.

In Europe, the ECB raised interest rates by 25 basis points but refrained from committing to future hikes, pushing the euro lower and European stocks higher, with the Euro Stoxx 50 index now at its highest level since December 2007.

Investors are awaiting an important meeting today from the Federal Reserve and the Federal Deposit Insurance Corporation, where they will decide on the regulatory capital increases that large U.S. banks will have to enact. The decision will likely produce an impact on Wall Street’s financial stocks, including JPMorgan Chase & Co. JPM, Bank of America Corp. BAC, Citigroup Inc. C, Goldman Sachs Group Inc GS, Wells Fargo & Co. (NYSE WFC) and Morgan Stanley MS.

Cues From Thursday's Trading:

The S&P 500 Index rose 0.5%, while the Nasdaq 100 soared 1.5%, the best daily performance in two weeks.The Dow was slightly up by 0.1%, while small caps somewhat eased by 0.1%.

US Index Performance On Thursday

Analyst Color:

Amid the market buoyancy, an analyst recommends investors remain cautious.

The S&P 500 Index has advanced by 27% over the past nine months, with gains accelerating considerably in the past six weeks. but these recent gains aren't all that different from prior bear market rallies, said Morgan Stanley's Lisa Shalett.

“In fact, in all seven bear markets since 1960, stocks have come close to reaching their prior highs before falling to their ultimate lows for the cycle, which is why we think investors may want to remain cautious today,” she said.

The analyst recommends that investors trim the gains achieved through passive exposure to U.S. stock indices and rebalancing toward value-style and "growth at a reasonable price" stocks.

Thursday’s Trading In Major US Equity ETFs: In midday trading on Thursday, the SPDR S&P 500 ETF Trust SPY was 0.5% higher to $458, the SPDR Dow Jones Industrial Average ETF DIA rose 0.1% to $355 and the Invesco QQQ Trust QQQ was 1.4% higher to $382, according to Benzinga Pro data.

U.S. equity sectors had mixed performance, with the Communication Services Select Sector SPDR Fund XLC outperforming, up 2.5%. The Technology Select Sector SPDR Fund XLK and the Consumer Discretionary Select Sector SPDR Fund XLY also posted strong gains, up 1.2% and 1.1%, respectively.

The Real Estate Select Sector SPDR Fund XLRE suffered the most, down 1%, followed by the Utilities Select Sector SPDR Fund XLU, down 0.9%.

Latest Economic Data:

The American economy expanded at an annualized rate of 2.4% in the second quarter of 2023, accelerating from the previous quarter's GDP reading of 2% and sharply outpacing economist expectations of 1.8%.

The U.S. Census Bureau reported a spectacular 4.7% monthly increase in durable goods orders for June, the highest since December 2022, marking a substantial increase from the 1.8% growth recorded in May and far beating the estimated 1% increase.

The Labor Department reported a drop in weekly jobless claims from 228,000 to 221,000, well below the expected 235,000.

See also: Best Futures Brokers

Stocks In Focus:

• Crocs Inc. CROX tumbled 15%, despite beating Q2 estimates, as executives highlighted that wholesale growth is expected to be low this year.
• QuantumScape Corp. QS rose over 25% as the company announced it will work with a potential launch customer in the automotive sector for the first commercial product.
• Align Technlogies, Inc. ALGN rose 17% on a Q2 earnings beat.
• Lam Research Corp. LRCX rose 11% as the company reported better than expected sales.
• Chipotle Mexican Grill, Inc.  CMG fell 9% after disappointing results last quarter.
• Comcast Corp. CMCSA rose 6.3% after beating Q2 expectations.
• Companies reporting after the market close include Ford Motor Co. F, First Solar, Inc. FSLR, KLA Corp. KLAC and Roku, Inc. ROKU.

Commodities, Bonds, Other Global Equity Markets:

Crude oil rose 1.8%, with a barrel of WTI-grade crude trading at $80.2. The United States Oil Fund ETF USO was 1.7% higher to $71.9.  

Treasury yields were higher, with the 10-year yield up by 7 basis points to 3.94% and the two-year yield up by 6 basis points to 4.91%. The iShares 20+ Year Treasury Bond ETF TLT was 1.2% lower for the day. 

The dollar rallied, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, up 0.7%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, tumbled 0.8% to 1.0995.

European equity indexes closed in the green. The SPDR DJ Euro STOXX 50 Etf  FEZ rose 1.5%. 

Gold fell 1.4% to $1,943/oz. The SPDR Gold Trust GLD was 1.6% lower to $182. Silver collapsed 2.9% to $24.19, with the iShares Silver Trust SLV down 3% to $22.2. Bitcoin BTC/USD was flat at $29,307.

Staff writer Piero Cingari updated this report midday Thursday.