July 6, 2022

News of the Trade

Latest trading, investing, and financial news

U.S. stocks open higher, headed for second positive session in 3

U.S. stocks opened higher on Thursday, and were on track for the second positive session in three, as tech shares rallied alongside more defensive stocks like consumer staples and healthcare.

What’s happening
  • The Dow Jones Industrial Average
    rose 170 points, or 0.6%, to 30655

  • The S&P 500
    gained 27 points, or 0.7%, to 3787.

  • The Nasdaq Composite
    increased 109 points, or 1%, to 1163.

On Wednesday, the Dow Jones Industrial Average
fell 47 points, or 0.15%, to 30483, the S&P 500
declined 5 points, or 0.13%, to 3760, and the Nasdaq Composite
dropped 16 points, or 0.15%, to 11053.

What’s driving markets

The focus of investors is whether the U.S. economy is headed for a recession. Federal Reserve Chair Jerome Powell on Wednesday testified a recession was a possibility even as he stuck to his message that the economy is strong enough to withstand a series of interest-rate hikes.

“The ‘unconditional’ notion that the Fed would be prepared to tolerate a recession if that is ultimately required to tame inflation has not been repudiated,” said Krishna Guha, vice chairman of Evercore ISI.

“But the fact that this was kept in the background not the foreground [on Wednesday] both avoids opening the Fed up to political attack from the left, and confirms that Powell does not want to do anything that might prematurely foreclose on the possibility of a softish landing, even at the cost of leaving the Fed short of Volcker-esque maximum forcefulness on inflation at this time.”

Still, it was difficult to pinpoint an exact driver of stocks on Thursday, with analysts blaming myriad technical factors.

“Dip buyers, bottom pickers, quarter end rebalancing, rotation out of commodities into stocks. Pick your favorite,” said Mohannad Aama, a portfolio manager at Beam Capital Management.

Powell’s Thursday testimony before lawmakers with the House Financial Services Committee started at 10 a.m. Eastern Time.

The recent talk of recession has brought the yield on the 10-year Treasury
down to 3.09% from as high as 3.48% earlier this month. Falling yields can help long-duration assets such as technology stocks and bitcoin
which rose in early action on Thursday.

New filings for unemployment benefits declined by 2,000 last week to 229,000 while remaining near a five-month high. It’s the latest sign that the U.S.’s red-hot labor market is finally starting to cool.

Single-stock movers
  • Revlon
    shares retreated Thursday following a torrid rally that was reminiscent of the “meme stock” craze from early 2021, as the company’s heavily shorted shares have surged more than 300% since the firm filed for bankruptcy protection.

  • Altria Group
    continued to slide as the FDA prepares to order Juul e-cigarettes to be banned in the U.S. market.

  • Boxed
    the online wholesale retailer, saw its shares surge 18%.

  • Occidental Petroleum
    shares surged 4% as Berkshire Hathaway CEO Warren Buffett increased his firm’s stake in the oil and gas company, according to regulatory filings cited by the Wall Street Journal.