Shoppers are seen at a Whole Foods Market on October 14, 2022 in Atlanta, Ga.
Elijah Novelage | Elijah Novelage AFP | Getty Images
This report is from today’s edition of CNBC’s Open Daily, our new international markets newsletter. The CNBC Daily Open keeps investors up-to-date with everything they need to know, no matter where they are. Like what you see?you can subscribe here.
what you need to know today
bank push
U.S. stocks rose on Thursday, buoyed by gains in the banking sector as investors celebrated positive results from the Federal Reserve’s annual bank stress test. European markets ended mixed. H&M reported a better-than-expected second-quarter profit, sending shares up 18%. In addition, Spain’s June inflation fell to 1.9% year-on-year.
krone in the corner
The Swedish currency fell to a record low of 0.0846 kroner per euro after the Riksbank raised interest rates by 25 basis points to 3.75%. Higher interest rates usually cause the currency to appreciate as it brings in more returns, so lower interest rates mean traders are worried about the state of the Swedish economy.
Spaceflight succeeds, but shares fall
Virgin Galactic successfully completed its first commercial space flight yesterday. The flight, called Galaxy 01, took off in New Mexico with three paying passengers, all members of the Italian Air Force. Despite the smooth mission, Virgin Galactic shares fell more than 10% yesterday and fell a further 0.7% during the extended training session.
(PRO) Initial Public Offering (IPO) Becomes Reality
The IPO market is buzzing again. The three IPOs of Savers Value Village, Kodiak Gas Services and Fidelis Insurance were priced on Wednesday and started trading yesterday. CNBC Pro’s Bob Pisani breaks down their performance, picks a winner and explains what it means for the IPO market as a whole.
the bottom line
There is a saying in the market, don’t fight the Fed. Traders might want to add a new adage: don’t short the U.S. economy.
Despite repeated warnings of an inevitable recession, the U.S. economy grew tenaciously by 2% in the first quarter of this year. It was driven by a rebound in exports, which rose 7.8% after falling 3.7% in the fourth quarter of 2022.
What’s more, consumer spending rose 4.2%, the fastest quarterly pace since the second quarter of 2021 — when households were still flush with cash stimulus check. I’ve said before that the U.S. economy is likely to avoid a recession thanks to the power of the consumer — and the latest data points seem to confirm that theory.
There are other signs that the economy is not yet broken. Initial jobless claims fell to 239,000 for the week ended June 24, according to the Labor Department report. The figure was 26,000 fewer than the previous week, well below economists’ expectations and signifying an unexpected improvement in the job market.
Meanwhile, stocks rose after a stellar day for big banks.this S&P 500 Index up 0.45%, Dow Jones Industrial Average increased by 0.8%, but Nasdaq Composite Index Closed flat. All three indices are on track to end the first half of the year with incredible numbers. Year to date, the S&P is up 14.5%, the Dow 2.9% and the Nasdaq nearly 30% on track for its best first-half performance since 1983.
Can the market sustain this incredible momentum? The personal consumption expenditures price index due later today will provide some clues. It’s the Fed’s most closely watched measure of inflation, so if the personal consumption expenditures data tops expectations, a series of rate hikes could follow.
Still, given the resilience of markets and the economy despite 10 consecutive rate hikes, perhaps they may continue to surprise us as we move into the second half of 2023.