Major Wall Street indexes jumped tomorrow Thursday following rising data from Washington pointing to a strengthening of the economic recovery.
The Dow Jones Industrial Average gained 300 points at the start of trading, while the S&P 500 and Nasdaq also climbed higher following a turbulent session on Wednesday after the Federal Reserve signaled an interest rate hike that could come soon. of March.
U.S. gross domestic product (GDP) rose in the last months of 2021 at a better -than -expected 6.9% annualized rate in Q4, higher from Bloomberg economists ’consensus estimate of 5.5%. Meanwhile, first -time unemployment rates dropped for the first time in four weeks after hitting a three -month high in the previous reading, suggesting that some of the disruptions associated with Omicron have recently weighed in on recovery of the labor market may weaken.
The Federal Reserve held rates at near zero following a two -day policy meeting that ended Wednesday, citing plans to halt policy first during the pandemic of asset purchases. The Federal Open Market Committee, however, reaffirmed that it would end the process in early March, suggesting that the first rate increase could come in six weeks.
Investors expect clarity from the Fed on the steps it will take to reduce inflation leading up to Wednesday’s statement, with uncertainty over the speed and extent of policy change weighing on markets since the start of the new year. .
“While offering some clarity on how the Fed will begin the process of eliminating policy accommodation, the outcome of the meeting lacked in providing the necessary guidance on the timing and magnitude of policy change,” said Charlie Ripley, senior investment strategist for Allianz Investment Management says in a note. “Today’s meeting has fully convinced market participants that an increase in March is certain, but in not making any promises on Chairman Powell’s timing, the door is partially open for a slower move. Fed. “
While questions about when – and how deep – short -term borrowing costs will increase, the Federal Open Market Committee unanimously agreed that “it will soon be appropriate to raise the target range for federal amount of funds, ”with statements from Federal Reserve Chair Jerome Powell signaling that the first increase will take place on March 16, after the next scheduled central bank meeting.
“I would say that the committee has in mind raising the rate of federal funding at the March meeting, assuming the conditions are appropriate to do so,” Powell said at a press conference. “I don’t think it’s possible to say exactly how it’s going to go, and we have to be, as I mentioned, that nimble about it.”
JPMorgan Chief U.S. Economist Michael Feroli said Powell’s comments were “probably the most hawkish he’s made as Fed Chair.”
Powell diverted questions about whether the 50 basis point hike is on the table, including one shared by Yahoo Finance’s Brian Cheung about whether the increases will be gradual, but Powell indicated that the central moves banks may vary in tempo since it started raising rates in 2015 due to the noticeably stronger economy and labor market and hot inflation.
“While remaining unfocused, Powell clearly wants to point out that hiking to consecutive meetings is a possibility, a risk that we’re also flagging,” Feroli said.
9:30 am ET: Stocks are moving on the back of strong economic data
Here are the main moves in the markets at the beginning if the trading session on Thursday:
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S&P 500 (^GSPC): +43.42 ( +1.00%) to 4,393.35
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Dow (^DJI): +285.29 ( +0.83%) to 34,453.38
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Nasdaq (^IXIC): +151.11 ( +1.12%) to 13,693.23
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crude (CL = F): +$ 1.03 ( +1.18%) to $ 88.38 a barrel
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gold (GC = F): -$ 31.60 (-1.73%) to $ 1,798.10 per ounce
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10-year Treasury (^TNX): -1.1 bps to yield 1.8370%
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9:12 am: New orders for US -made capital goods remain stagnant
U.S. capital goods were unexpectedly unchanged in December, indicating a slowdown in business spending on equipment amid shortfalls.
The Commerce Department said on Thursday that last month’s unchanged reading on orders for non-defense capital goods excluding aircraft followed a 0.3% increase in November. Printing serves as a closely watched proxy for business spending plans.
Economists expect orders to rise 0.4%, according to Bloomberg consensus estimates.
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8:30 am ET: The U.S. economy is expanding at a 6.9% annualized rate, ahead of forecasts
US gross domestic product (GDP) rose in the last months of 2021, with consumer spending still stable helping to stimulate growth and offset by early negative effects from the spread of the Omicron variant.
The Bureau of Economic Analysis reported on Thursday that the U.S. economy expanded at a better -than -expected 6.9% annualized rate in Q4, from Bloomberg economists ’consensus estimate of 5.5%.
Growth in the fourth quarter rose more than expected from the disappointing third -quarter rate of expansion, when GDP rose at a 2.3% annualized rate – its slowest since mid -2020.
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8:30 am ET: Unemployment claims in the U.S. are declining as Omicron disruptions begin to weaken
First -time unemployment filings were lower for the first time in four weeks after hitting a three -month high in the previous reading, suggesting that some of the delays associated with Omicron have recently weighed on recovery. of the labor market may weaken.
The Department of Labor reported that another 260,000 individuals filed new claims for the week ending Jan. 22, slightly less than the expected 265,000 seen in Bloomberg’s consensus estimates. Last week, first-time unemployment filings rose a three-month high amid new virus-related disruptions.
Although the spread of Omicron may slow, payrolls will be slower to respond to falling COVID cases than real-time activity data, according to Pantheon Macroeconomics Chief Economist Ian Shepherdson.
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7:00 am ET: Southwest Airlines flies with first quarterly profit in two years
Fourth quarter results from Southwest Airlines Co (LUV) reflect the Texas-based carrier earning its first quarterly profit in two years in the last three months of 2021, fueled by holiday travel before the Omicron outbreak. The company also said it expects to make a profit in 2022.
Southwest, however, expects a loss in the current quarter through March due to restrained revenue and rising costs associated with delays from Omicron. The airline expects to be profitable in the remaining three quarters of the year.
“In cases of COVID-19 dropping, the worst seems to be behind us,” said incoming CEO Bob Jordan. Jordan is expected to take his position as the company’s sixth chief executive next month.
Southwest shares were mostly flat in pre-market trading at $ 43.77 per piece.
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7:00 am: Futures on all three major index seesaw before tomorrow
Here is what stock futures looked like in pre-market trading Thursday morning:
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S&P 500 futures (ES = F): +9.75 points ( +0.22%), up 4,351.25
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Dow futures (YM = F): +39.00 points ( +0.11%), up 34,094.00
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Nasdaq futures (NQ = F): +61.00 points (+0.43%) to 14,219.50
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crude (CL = F): +$ 0.89 ( +1.02%) to $ 88.24 a barrel
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gold (GC = F): -$ 18.90 (-1.03%) to $ 1,810.80 per ounce
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10-year Treasury (^TNX): +0.00 bps to yield 1.8480%
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6:00 pm ET Wednesday: Stock futures creep forward as investors ponder the Fed’s comments
Here are the key moves in post-market trading before the overnight session:
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S&P 500 futures (ES = F): +8.25 points ( +0.19%), up 4,349.75
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Dow futures (YM = F): +31.00 points ( +0.09%), up 34,086.00
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Nasdaq futures (NQ = F): +44.00 points (+0.31%) to 14,202.50
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crude (CL = F): +$ 0.23 ( +0.26%) to $ 87.12 a barrel
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gold (GC = F): -$ 10.80 (-0.59%) to $ 1,818.90 per ounce
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10-year Treasury (^TNX): +6.5 bps to yield 1.8480%
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Alexandra Semenova is a reporter for Yahoo Finance. Follow him on Twitter @alexandraandnyc
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