NEW YORK, July 28 (Reuters) – U.S. stocks rose for a second day on Thursday, with all three major indexes ending more than 1% higher, as data showing a second consecutive quarter of contraction in the economy did little to fuel investor speculation from the Federal Reserve. As some feared, interest rate hikes should be aggressive.
Yields on 10-year Treasury notes retreated following the data, while utilities (.SPLRCU) and real estate (.SPLRCR) — both of which rise when yields fall — are the S&P 500 sectors that performed best on the day.
The decline in yields means “markets think the Fed will have to cut and cut rates at some point in the next 12-month period,” said Mona Mahajan, senior investment strategist at Edward Jones.
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“This indicates that the pace of tightening will gradually progress.”
Additionally, growth forecasts for second-quarter earnings rose this week as S&P 500 companies reported results that beat analyst expectations. Among them, Ford Motor Company (FN) Shares rose 6.1% after posting better-than-expected quarterly net income. read more
After hours, Amazon.com shares rose more than 12% after the online retailer reported quarterly sales that beat Wall Street estimates. Amazon.com ended the regular session up 1.1%. Read more about Apple stock (AAPL.O) It rose more than 3% after hours following the company’s quarterly report and upbeat forecast, and S&P 500 e-mini futures rose 2% late. read more
Earlier in the day, the U.S. Commerce Department said the U.S. economy unexpectedly shrank in the second quarter — the second straight quarterly decline in government-reported gross domestic product (GDP). read more
The news raised the possibility that the economy is on the brink of a recession, and some investors said the central bank could be deterred from raising rates aggressively again as it battles high inflation.
Dow Jones Industrial Average (.DJI) The S&P 500 rose 332.04 points, or 1.03%, to 32,529.63. (.SPX) The Nasdaq Composite rose 48.82 points, or 1.21%, to 4,072.43. (.IXIC) It added 130.17 points, or 1.08%, to 12,162.59.
The Nasdaq posted its biggest two-day percentage gain since May 27.
Stocks rallied in the previous session when the central bank raised rates and Fed Chairman Jerome Powell’s comments eased some concerns about the pace of rate hikes. read more
“More investors are coming in now because they think there won’t be any big surprises in the balance of the summer,” said Alan Lancz, president of Alan B. Lancz & Associates Inc, of rates. An investment advisory firm based in Toledo, Ohio.
The central bank on Wednesday raised the benchmark overnight rate by three-quarters of a percentage point. The move followed a 75-basis-point hike last month and smaller moves in May and March, an attempt by the U.S. central bank to curb rising inflation.
Investors are concerned that inflation and aggressive Fed rate hikes could push the economy into recession at some point. read more
Among the declining stocks was Facebook and Instagram parent Meta Platforms Inc (META.O) Revenue fell 5.2% after posting its first-quarter drop. read more
Volume on US exchanges was 11.21 billion shares, compared to the full session’s average of 10.86 billion shares over the last 20 trading days.
Advancing issues outnumber declining issues on the NYSE by a 3.56-to-1 ratio; On the Nasdaq, a 1.66-to-1 ratio favored the advancers.
S&P 500 hits three new 52-week highs and 31 new lows; The Nasdaq Composite posted 67 new highs and 97 new lows.
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Reporting by Carolyn Valetkevich; Editing by Jonathan Otis
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