After moving to the upside early in the session, stocks remain mostly positive in afternoon trading on Thursday. With the upward move on the day, the Dow and the S&P 500 have reached new record intraday highs.
The major averages have moved roughly sideways in recent trading, hovering in positive territory. The Dow is up 221.00 points or 0.6 percent at 35,151.93, the Nasdaq is up 54.09 points or 0.4 percent at 14,816.67 and the S&P 500 is up 27.98 points or 0.6 percent at 4,428.62.
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.
Gold stocks continue to see substantial strength on the day, with the NYSE Arca Gold Bugs Index surging up by 3.3 percent to its best intraday level in over a month.
The rally by gold stocks comes as the price of gold for August delivery is soaring $31 to $1,830.70 an ounce.
Significant strength also remains visible among steel stocks, as reflected by the 3.3 percent spike by the NYSE Arca Steel Index. The index has reached a more than two-month intraday high.
Housing stocks are also turning in a strong performance despite the unexpected drop in pending home sales, resulting in a 3 percent jump by the Philadelphia Housing Sector Index.
Networking, semiconductor and financial stocks are also seeing considerable strength on the day, moving higher along with most of the other major sectors.
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 also moved to the upside on the day. While the U.K.’s FTSE 100 Index advanced by 0.9 percent, the German DAX Index and the French CAC 40 Index rose by 0.5 percent and 0.4 percent, respectively.
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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