US close: Stocks rise on hopes of a rate hike pause

dl new york stock exchange us markets wall st wall street nyse dow jones industrial average sp500 trading unsplash — Sharecast / Aditya Vyas via Unsplash

Wall Street stocks continued their upward trend by the close on Thursday, as banking concerns showed further signs of easing.

Economic data releases also contributed to sentiment, as a downward revision to GDP and higher-than-expected jobless claims suggested a potential pause in interest rate hikes.

The Dow Jones Industrial Average rose 0.43% to close at 32,859.03, while the S&P 500 gained 0.57% to 4,050.83.

The technology-heavy Nasdaq Composite had the strongest performance, advancing 0.73% to finish at 12,013.47.

In currency markets, the dollar weakened slightly against its European pairs, last falling 0.01% on sterling and the euro to trade at a respective 80.72p and 91.69 euro cents.

It remained relatively stable against the yen, however, at JPY 132.70.

“A rise in jobless claims and lower US fourth quarter GDP growth boosted the hopes of those expecting the Fed to be on pause at its next meeting and beyond,” said IG chief market analyst Chris Beauchamp earlier.

“The dollar index continues to trade in a bearish fashion, and is on the cusp of a break towards the February lows.”

GDP growth revised down as initial jobless claims top forecasts

In economic news, newly released data showed that the country's economy expanded slightly less than previously estimated in the fourth quarter of 2022.

US gross domestic product (GDP) grew at an annual pace of 2.6%, down from the previous estimate of 2.7%, and the 3.2% growth recorded in the third quarter.

The reduction was mainly due to downward revisions to exports and consumer spending.

“The slight downward revision to fourth quarter GDP shows the economy ended 2022 with marginally less momentum,” said analysts at Oxford Economics.

“Looking ahead, the economy will face the full brunt of tighter credit conditions and Fed policy this year, and inflation is set to stay above its historical trend.”

Oxford said the recent banking sector turmoil would affect the economy, mainly through tighter lending standards and a reduction in the availability of credit.

“We expect a recession to hit in the second half of 2023, with a peak-to-trough GDP decline of around 1.5%.”

Elsewhere, the number of Americans filing for unemployment benefits also increased last week, with initial jobless claims rising by 7,000 to 198,000 in the week ended 25 March, according to the Labor Department.

Although that was slightly above expectations for a figure of 196,000, it remained a historically low level, suggesting a tight labour market.

The four-week moving average, which aims to smooth out week-to-week volatility, increased by 2,000 to 198,250.

Meanwhile, the number of people receiving unemployment insurance rose by 4,000 to 1.68 million during the week ended 18 March.

On a seasonally-unadjusted basis, initial claims increased by 10,906 to 223,913.

EVgo charges ahead while meme pick BBBY tumbles

In equity markets, shares in electric vehicle charging network operator EVgo jumped 22.09% after the company reported better-than-expected financial results.

The firm’s revenue quadrupled and losses were significantly reduced in its latest quarterly figures.

On the downside, streaming hardware maker Roku fell 3.58% after it announced plans to lay off 200 workers and close some office locations.

Meme stock favourite and home goods retailer Bed Bath & Beyond tumbled 26.23% by the close, after it renewed its warning about the possibility of bankruptcy, while its board proposed a fundraising of $300m to shareholders.

Reporting by Josh White for Sharecast.com.

Dow Jones - Risers

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