Stocks have moved mostly higher in morning trading on Thursday following the mixed performance seen in the previous session. With the upward move on the day, the Dow and the S&P 500 have reached new record intraday highs.
Currently, the major averages are just off their highs of the session. The Dow is up 197.70 points or 0.6 percent at 35,128.63, the Nasdaq is up 62.84 points or 0.4 percent at 14,825.43 and the S&P 500 is up 25.23 points or 0.6 percent at 4,425.87.
The strength on Wall Street comes despite the release of some disappointing U.S. economic data, including a report from the Commerce Department showing economic growth fell well short of estimates in the second quarter.
The weaker than expected data may have added to optimism the Federal Reserve will not be in a hurry to begin scaling back its asset purchases.
On Wednesday, the Fed noted progress has been made towards the central bank’s maximum employment and price stability goals, although Fed Chair Jerome Powell noted there is still “some ground to cover on the labor market side.”
The Commerce Department said real GDP surged up by 6.5 percent in the second quarter following a 6.3 percent jump in the first quarter. Economists had expected GDP to spike by 8.5 percent.
The GDP growth in the second quarter reflected increases in consumer spending, non-residential fixed investment, exports, and state and local government spending.
However, decreases in private inventory investment, residential fixed investment, and federal government spending limited the upside along with an increase in imports, which are a subtraction in the calculation of GDP.
“The good news is that the economy has now surpassed its pre-pandemic level,” said Paul Ashworth,
Chief U.S. Economist at Capital Economics.
He added, “But with the impact from the fiscal stimulus waning, surging prices weakening purchasing power, the delta variant running amok in the south and the saving rate lower than we thought, we expect GDP growth to slow to 3.5% annualized in the second half of this year.”
Meanwhile, the Labor Department released a report showing a modest pullback in initial jobless claims in the week ended July 24th.
The report said initial jobless claims dipped to 400,000, a decrease of 24,000 from the previous week’s revised level of 424,000.
Economists had expected jobless claims to drop to 380,000 from the 419,000 originally reported for the previous week.
The National Association of Realtors also released a report showing an unexpected pullback in pending home sales in the month of June.
NAR said its pending home sales index tumbled by 1.9 percent to 112.8 in June after soaring by 8.3 percent to a revised 115.0 in May.
The pullback surprised economists, who had expected pending home sales to edge up by 0.3 percent compared to the 8.0 percent spike originally reported for the previous month.
A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
Steel stocks have shown a strong move to the upside on the day, driving the NYSE Arca Steel Index up by 2.9 percent to its best intraday level in over two months.
Substantial strength is also visible among gold stocks, as reflected by the 2.8 percent spike by the NYSE Arca Gold Bugs Index.
The rally by gold stocks comes amid a sharp increase by the price of the precious metal, with gold for August delivery surging up $26.70 to $1,826.40 an ounce.
Housing stocks are also turning in a strong performance despite the unexpected drop in pending home sales, resulting in a 2.6 percent jump by the Philadelphia Housing Sector Index.
Networking, semiconductor and brokerage stocks are also seeing notable strength on the day, while natural gas stocks have moved to the downside.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan’s Nikkei 225 Index climbed by 0.7 percent, while China’s Shanghai Composite Index jumped by 1.5 percent.
The major European markets have also moved to the upside on the day. While the U.K.’s FTSE 100 Index has advanced by 0.9 percent, the French CAC 40 Index is up by 0.5 percent and the German DAX Index is up by 0.4 percent.
In the bond market, treasuries are modestly lower after initially showing a lack of direction. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1 basis point at 1.271 percent.
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