Marketbites: Big Banks Pass Fed's Stress Test
Portfolio Manager Commentary:
On Thursday, the Dow Jones Industrial Average rose by 0.8% to close at 34,122.42. Major bank stocks such as JPMorgan Chase, Goldman Sachs, and Wells Fargo saw notable increases after passing the Federal Reserve's stress test. The S&P 500 also ended the day up by 0.45%, while the Nasdaq Composite closed flat.
Positive economic data, including an upward revision in the first-quarter GDP and a decline in weekly jobless claims, eased concerns about a potential recession. This led to increased market confidence and resilience. The S&P 500 has risen by 14.5% this year, on track for its best monthly performance since January. The Nasdaq has climbed nearly 30%, heading towards its best first half since 1983, driven by optimism surrounding artificial intelligence. However, the Dow has underperformed, with a modest gain of 2.9%.
Despite the solid start to 2023, some on Wall Street are bracing for a potentially volatile second half.
“Markets don’t go up in a straight line forever, and so, we wouldn’t be surprised to see some period of consolidation,” as Wall Street takes some profits, Edward Jones senior investment strategist Mona Mahajan said. Investors should consider using volatility to position for a broad-based recovery, she added.
Chart of the Day:
Natural gas is starting the summer at less than half the price it was a year ago. Cheaper natural gas should mean lower electricity bills for a lot of American households when they crank up their air conditioners. Makers of chemicals, cat litter, fertilizer, paper, wallboard, and steel have told investors over the past few weeks that lower gas bills are easing cost pressures and bolstering profit margins.
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