Micron moves down in morning trading
The S&P 500 rose slightly Thursday as the market approached the end of the second quarter and first half. Bank stocks gained as the country’s biggest lenders passed the Federal Reserve’s annual stress test.
JPMorgan Chase, Bank of America and Wells Fargo rose more than 3% each. Other financial stocks hit during this year’s banking crisis also gained, including Charles Schwab, Western Alliance and Zions Bancorporation.
A bout of positive economic data signaled economic resilience despite looming recession fears. That included a large upward revision in first-quarter GDP and drop in jobless claims data to the lowest level since May.
Just two trading days remain in what’s been a banner first half. The S&P 500 is up 14% this year and on pace for its best monthly performance since January. The tech-heavy Nasdaq has climbed nearly 30% — heading toward its best first half since 1983 — as rising optimism around artificial intelligence pushed up a slew of tech names and chipmakers. The blue-chip Dow is the relative underperformer, up just 2% this year.
Despite a solid start to 2023, many on Wall Street are expecting a volatile second half.
“The Fed, the data, and the AI story all have to go right for equities to go higher, since the S&P 500 is already priced for a near-perfect landing, while anything going wrong could lead to a downturn,” Jason Draho, head of asset allocation Americas at UBS Global Wealth Management, said in a note.
On Wednesday, the S&P 500 closed near the flatline as investors digested Federal Reserve Chair Jerome Powell’s latest comments at a forum sponsored by the European Central Bank that signaled more restrictive policy ahead and the prospect of additional rate hikes. Powell echoed similar sentiment speaking Thursday at a conference in Spain.
Odds rising that a July Fed rate hike is a near certainty. And now September’s in play too.
Odds that the Federal Reserve will raise its benchmark fed funds rate to 5.25%-5.50% at its next meeting on July 26 have climbed to more than 89% in the wake of Thursday’s upward revision to first quarter gross domestic product and weaker-than-expected weekly jobless claims.
The probability of a July hike was less than 82% on Wednesday and 74% a week ago, according to the CME Fed Tracker tool that uses 30-day fed funds futures pricing data.
Meanwhile, the probability of another quarter point move to 5.50%-5.75% at the Fed’s next meeting in September (it skips August), have also risen further, to almost 27%. A week ago, the odds of rates moving that high in September were a hair below 15%.
— Scott Schnipper
Investors sold gains on Micron as the market opened Thursday, pushing shares down more than 4% after trading up briefly.
Despite the leg down in morning trading, the chip stock is still up more than 30% this year.
— Alex Harring
Stocks open little changed
Stocks opened little changed on Thursday, with all three major averages hovering near the flatline.
The S&P 500 and Nasdaq Composite dipped less than 0.05% each, while the Dow Jones Industrial Average added 13 points.
— Samantha Subin
Stocks making the biggest premarket moves
Here are some of the names making moves in the premarket
- Joby Aviation — Shares gained another 19% premarket. The aviation company announced a $100 million equity investment from South Korea’s SK Telecom, expanding an existing partnership. On Wednesday, the stock surged 40% after the company said it received a permit to begin flight testing its first electric vehicle takeoff and landing vehicle (eVTOL).
- Overstock — Shares rose nearly 10% after the retailer closed its deal to buy the Bed Bath & Beyond brand out of bankruptcy. Overstock will shift to using the Bed Bath & Beyond name in the coming weeks.
- Virgin Galactic — The stock climbed about 2% ahead of the spaceflight company’s first commercial spaceflight launch later Thursday.
— Michelle Fox
Powell expects it will take ‘a good while’ for low inflation to return
Federal Reserve Chairman Jerome Powell said Thursday he doesn’t expect a low-inflation environment to happen anytime soon, complicating decisions for policymakers.
Speaking in Madrid, Spain, the U.S. central bank leader said it could be a “good while” before the rate of price increases returns to the Fed’s 2% target.
“In terms of rates we’re, you know, I think we’re just going to have to find our way,” Powell said during a question-and-answer session.
“You would have thought it would have wouldn’t have been thinkable to have a 5% interest rate before the pandemic, and now the question is, is that tight enough policy?” he added. “A strong majority of [Federal Open Market Committee] participants think that we need to do more to get to a level of tight policy … So I don’t think we have the longer-run answer.”
GDP revision, jobless claims show resilient economy
Two pieces of economic data on Thursday suggested that the U.S. economy is in stronger shape that Wall Street thought.
First-quarter GDP was revised sharply higher to 2.0% growth from 1.3%, according to the Commerce Department.
Meanwhile, weekly jobless claims fell to 239,000, the lowest level since May. Economists surveyed by Dow Jones were expecting 264,000 claims.
— Jesse Pound
Big banks rise after passing Fed stress test
Bank stocks rose broadly in premarket trading Thursday after passing the Federal Reserve’s annual stress test that evaluates the financial resilience of the largest financial institutions.
The Fed said Wednesday that all 23 banks included in the annual assessment are well capitalized to weather a severe recession scenario. This year’s stress test comes after a slew of bank collapses sent shockwaves through the industry.
— Samantha Subin
Freyr pops in premarket trading following bullish Morgan Stanley call
Freyr jumped more than 10% before the bell on the back of a Morgan Stanley upgrade.
Analyst Adam Jonas upgraded the battery stock to overweight from equal weight. His $13 price target implies shares could rally 72.2% from Wednesday’s close. That would mark a turn for the stock, which has fallen about 13% this year.
“We see next 3-6 months as a catalyst window for unlocking shareholder value,” Jonas said in a Wednesday note. “In our opinion, FREY is a relatively binary investment opportunity that we believe can show meaningful progress on commercial milestones.”
CNBC Pro subscribers can click here to read more.
— Alex Harring
Chip stocks gain with Micron
Popular chipmakers rose before the bell as Micron Technology posted better-than-expected results for the recent quarter and highlighted improving demand trends.
The news boosted Micron more than 3% premarket. Popular artificial intelligence beneficiaries Nvidia and Advanced Micro Devices rose 1% and 1.8%, respectively, in sympathy. Marvell Technology also gained 1%.
— Samantha Subin
Treasury yields climb as investors digest Fed Chair Powell’s interest rate comments
U.S. Treasury yields rose on Thursday as investors considered what could be next for interest rates after Federal Reserve Chairman Jerome Powell gave new hints about the monetary policy outlook. Further restriction is expected, Powell said Wednesday, adding that there is a possibility of rates being hiked at consecutive Fed policy meetings.
Yields and prices move in opposite directions. One basis point equals 0.01%.
— Sophie Kiderlin
Fed Chair Powell: U.S. bank failures highlight need for stronger regulation
Federal Reserve Chairman Jerome Powell testifies during the House Financial Services Committee hearing titled “The Federal Reserve’s Semi-Annual Monetary Policy Report,” in Rayburn Building on Wednesday, June 21, 2023.
Federal Reserve Chairman Jerome Powell said Thursday that the collapse of Silicon Valley Bank and two other mid-sized American banks earlier this year indicated a “need to strengthen our supervision and regulation of institutions of the size of SVB.”
Speaking at a conference held by the Spanish central bank in Madrid, Powell suggested the stress in the banking system over the spring would have been “much more difficult to manage had the largest banks been undercapitalized or illiquid.”
He also said the Fed is “very reluctant to say” if the banking crisis is over, adding that central bank policymakers’ job is to “worry about things.”
– Elliot Smith
Stocks on the move in Europe: H&M up 16% on strong earnings, Renault up 6%
H&M shares surged more than 16% to lead the pan-European Stoxx 600 index by early afternoon after the Swedish fashion retailer posted stronger-than-expected profits for the March to May period, and said third-quarter sales had also started well.
British outsourcing company Serco jumped 10% after increasing its full-year revenue and profit forecasts.
French carmaker Renault climbed 6% after raising its 2023 outlook on the back of successful new launches, particularly the SUV Austral and Dacia Jogger models.
At the bottom of the European blue chip index, Spanish electric utility Endesa dropped 8.8%.
– Elliot Smith
European markets little changed at the open
The pan-European Stoxx 600 index hovered around the flatline shortly after markets opened, with retail stocks adding 1.2% to lead gains while travel and leisure stocks fell 0.5%.
– Elliot Smith
S&P 500 and Nasdaq Composite on pace for four straight months of gains
The S&P 500 and the Nasdaq Composite are about to end June with flying colors.
The broad-market index is up 4.7% this month, while the tech-heavy benchmark has a gain of more than 5%. That marks the fourth consecutive winning month for both averages. It’s also the longest monthly streak of gains for both the S&P 500 and the Nasdaq Composite since 2021.
The tech sector boosted the S&P 500, rising 4.5% in June, but consumer discretionary also buoyed the index. That sector added 10.4%, courtesy of Carnival, Norwegian Cruise Line and Royal Caribbean. Each of the three travel stocks are on track for double-digit gains in June, according to FactSet.
The Nasdaq-100 is also on pace for a fourth straight winning month, up 4.9% in June. The index last accomplished this feat in 2020.
–Darla Mercado, Chris Hayes
Micron shares jump after earnings report
Micron Technology saw its shares jump more than 2% after the semiconductor company posted quarterly results that came in better than expected. The chipmaker posted a loss of $1.43 per share, compared to analyst estimate of a $1.61 loss, according to FactSet. Revenue of $3.75 billion in the fiscal third quarter was better than an estimate of $3.65 billion.
The company said the trough of the semiconductor industry might be over as price trends improved.
“The ongoing improvement of customer inventories and memory content growth are driving higher industry demand, while production cuts across the industry continue to help reduce excess supply,” Micron said.
— Yun Li
23 biggest banks passed the Fed’s stress test
All 23 of the U.S. banks included in the Federal Reserve’s annual stress test weathered a severe recession scenario while continuing to lend to consumers and corporations, the regulator said Wednesday.
The banks were able to maintain minimum capital levels, despite $541 billion in projected losses for the group, the Fed said in a release. Banks including JPMorgan Chase and Wells Fargo are expected to disclose updated plans for buybacks and dividends Friday after the close of regular trading.
— Hugh Son