Stocks Finish Positive Despite Disappointing Economic Results…..

U.S. stocks ended the day in the green after bouncing back from an initial dip in early market trading following yesterday’s sharp rally that intensified on the heels of yesterday’s Fed decision to hike rates by 75 basis points (bps) for the second-straight meeting. The Central Bank’s rate hike was expected but comments from Fed Chairman Jerome Powell appeared to soothe the markets as he said it will be data-dependent regarding its decision to hikes rates by that magnitude in September. Q2 GDP output unexpectedly fell, posting a second-consecutive quarterly contraction as inventory and real estate spending declined, while inflation pressures increased more than expected. Earnings continued to flood in, with Meta Platforms missing expectations on slowing advertising spending, and Comcast fell due to concerns about broadband subscribers, while Ford Motor Company and Dow member Merck & Co. both topped expectations. In other economic news, initial jobless claims dipped but came in above estimates. Treasuries finished mixed as the markets digested the Fed’s action and the GDP data, while the U.S. dollar closed lower. Crude oil prices pared early gains and ended mixed, while gold traded higher. Asia finished mostly higher after yesterday’s positive lead in from the U.S., while Europe ended mixed amid a flood of earnings and economic data.

The Dow Jones Industrial Average went up 332 points (1.0%) to 32,530, the S&P 500 Index advanced 49 points (1.2%) to 4,072, and the Nasdaq Composite increased 130 points (1.1%) to 12,163. In moderate volume, 4.4 billion shares of NYSE-listed stocks were traded, and 4.8 billion shares changed hands on the Nasdaq. WTI crude oil lost $0.84 to $96.42 per barrel. Elsewhere, the gold spot price advanced $33.60 to $1,752.70 per ounce, and the Dollar Index lost 0.2% to 106.26.

Q2 GDP contracts for second-straight quarter, jobless claims above estimates…..

The first look (of three) at Q2 Gross Domestic Product, the broadest measure of economic output, showed a 0.9% quarter-over-quarter (q/q) annualized rate of contraction, versus the consensus Bloomberg estimate of a 0.4% gain after the unrevised 1.6% decrease in Q1. Personal consumption rose by 1.0%, compared to forecasts of a 1.2% gain, and following the unadjusted 1.8% increase recorded in Q1. The Bureau of Economic Analysis said the decrease in GDP reflected declines in private inventory investment, residential fixed investment, federal and state government spending, and nonresidential fixed investment that were partially offset by increases in exports and personal consumption expenditures.

On inflation, the GDP Price Index came in at an 8.7% increase, well above expectations of an 8.0% gain and compared to the unrevised 8.2% rise seen in Q1, while the core PCE Price Index, which excludes food and energy, moved 4.4% higher, in line with expectations, and following the unadjusted 5.2% increase in Q1.

Weekly initial jobless claims came in at a level of 256,000 for the week ended July 23, above estimates calling for 250,000 and compared to the prior week’s upwardly-revised 261,000 level. The four-week moving average rose by 6,250 to 249,250, and continuing claims for the week ended July 16 declined by 25,000 to 1,359,000, versus estimates of 1,386,000. The four-week moving average of continuing claims increased by 8,750 to 1,362,000.

The July Kansas City Fed Manufacturing Activity Index unexpectedly moved further into expansion territory (a reading above zero). The index rose to 13 from June’s unrevised 12 reading, and compared to forecasts calling for a decline to 4.

Treasuries are mixed, and the inversion of the 2-year and 10-year notes remains intact with the markets grappling with yesterday’s Fed monetary policy decision, where it raised its benchmark interest rate by 75 basis points (bps) for the second-straight meeting and the markets appeared to take comments from Chairman Jerome Powell as less hawkish.

The yield on the 2-year Treasury note finished 13 bps lower to 2.87%, the yield on the 10-year note declined 6 bps to 2.67%, and the 30-year bond rate was up 2 bps to 3.02%.

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