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Wall Street closed higher on Thursday following strong economic data. Moreover, the Congressional Budget Office raised outlook for the U.S. economy in 2021, which bolstered market participants' confidence on risky assets like equities. All the three major stock indexes ended in green in the first trading day of July and the second half of 2021.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) was up 0.4% or 131.02 points to close at 34,633.53. Notably, 24 components of the 30-stock index ended in the green while 6 in red. The tech-heavy Nasdaq Composite finished at 14,522.38, rising 0.1% due to strong performance by large-cap technology stocks.
Meanwhile, the S&P 500 gained 0.5% to end at 4,319.54, its first closing above 4,300. In intraday, the index posted a new all-time high of 4,20.66. The Energy Select Sector SPDR (XLY) and the Utilities Select Sector SPDR (XLU) surged 1.7% and 1.1%, respectively. Notably, ten out of eleven sectors of the benchmark index closed in the green while one in red.
The fear-gauge CBOE Volatility Index (VIX) was down 2.2% to 15.48. A total of 9.53 billion shares were traded on Thursday, lower than the last 20-session average of 10.9 billion. Advancers outnumbered decliners on the NYSE by a 1.78-to-1 ratio. On Nasdaq, a 1.32-to-1 ratio favored advancing issues.
CBO Raises Economic Outlook
The Congressional Budget Office (CBO) has raised its outlook for the U.S. GDP growth rate of 2021 to 7.4%, a significant jump from 4.6% forecast on Feb 1. Thereafter, the GDP is expected grow around 2.8% per annum through 2025.
The core PCE price index - Fed's favorite gauge for inflation - will rise to 2.8% in 2021 compared with the Fed's estimate of 3.1%. The CBO said unemployment rate will fall to 4% in 2022. The yield on 10-Year U.S. Treasury Note, which is currently hovering around 1.5%, will expected to rise to 2.7% from the end of 2025.
Crude Oil Prices Surge
Crude oil prices surged in the first trading day of the second-half of 2021, despite the fact that the Organization of the Petroleum Exporting Countries and its allies, popularly known as OPEC+, delayed its decision regarding further easing of output cuts.
The West Texas Intermediate (WTI) crude for August delivery rose 2.4% to end at $75.23 a barrel on the New York Mercantile Exchange, the highest finish since October 2018. Similarly, September Brent crude, the global benchmark, was up 1.6% to settle at $75.84 a barrel on ICE Futures Europe.
The Department of labor reported that weekly jobless claims fell 51,000 to 364,000 for the week ended Jun 26, marking its lowest for the week ended Mar 14, 2020. Previous week's data was revised upwardly to 415,000. The consensus estimate was 385,000.
However, the continuing claims (those who have already received unemployment benefit) increased 56,000 to 3.47 million for the week ended Jun 21. The four-week moving average (eliminating weekly volatility) for continuing claims, fell by 75,000 to 3.48 million, the lowest since the week ended Mar 21, 2020.
The total number Americans receiving benefits across all types government programs decreased by 180,890 to 14.66 million for the week ended Jun 14. However, nearly 7 million workers are yet to return to the job market compared with the pre-pandemic level.
The Institute of Supply Management (ISM) have reported that its manufacturing purchasing managers' index (PMI) for June dropped slightly to 60.6% from 61.2% in May. The consensus estimate was 60.8%. Likewise, the IHS Markit reported that its manufacturing PMI for June decreased to 62.1% compared with a flash estimate of 62.6%, but unchanged from the May final reading.
Notably, any reading above 50 means expansions in manufacturing activities and a reading above 55 means strong expansions. Therefore, despite a slight drop in June reading of both the ISM and IHS Markit, U.S. manufacturing remains rock solid in June.
The Department of Commerce reported that construction spending fell 0.3% in May at a seasonally adjusted annual rate of $1.55 trillion. The consensus estimate was for a gain of 0.5%. April's data was revised upward from 0.2% to 0.5%.
The CBO have estimated that the U.S. budget deficit will hit $3 trillion for the fiscal 2021. The figure will be 13.4% of the GDP marking the second-largest since 1945.
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Stock Market News for Jul 2, 2021
Wall Street closed higher on Thursday following strong economic data. Moreover, the Congressional Budget Office raised outlook for the U.S. economy in 2021, which bolstered market participants' confidence on risky assets like equities. All the three major stock indexes ended in green in the first trading day of July and the second half of 2021.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) was up 0.4% or 131.02 points to close at 34,633.53. Notably, 24 components of the 30-stock index ended in the green while 6 in red. The tech-heavy Nasdaq Composite finished at 14,522.38, rising 0.1% due to strong performance by large-cap technology stocks.
Meanwhile, the S&P 500 gained 0.5% to end at 4,319.54, its first closing above 4,300. In intraday, the index posted a new all-time high of 4,20.66. The Energy Select Sector SPDR (XLY) and the Utilities Select Sector SPDR (XLU) surged 1.7% and 1.1%, respectively. Notably, ten out of eleven sectors of the benchmark index closed in the green while one in red.
The fear-gauge CBOE Volatility Index (VIX) was down 2.2% to 15.48. A total of 9.53 billion shares were traded on Thursday, lower than the last 20-session average of 10.9 billion. Advancers outnumbered decliners on the NYSE by a 1.78-to-1 ratio. On Nasdaq, a 1.32-to-1 ratio favored advancing issues.
CBO Raises Economic Outlook
The Congressional Budget Office (CBO) has raised its outlook for the U.S. GDP growth rate of 2021 to 7.4%, a significant jump from 4.6% forecast on Feb 1. Thereafter, the GDP is expected grow around 2.8% per annum through 2025.
The core PCE price index - Fed's favorite gauge for inflation - will rise to 2.8% in 2021 compared with the Fed's estimate of 3.1%. The CBO said unemployment rate will fall to 4% in 2022. The yield on 10-Year U.S. Treasury Note, which is currently hovering around 1.5%, will expected to rise to 2.7% from the end of 2025.
Crude Oil Prices Surge
Crude oil prices surged in the first trading day of the second-half of 2021, despite the fact that the Organization of the Petroleum Exporting Countries and its allies, popularly known as OPEC+, delayed its decision regarding further easing of output cuts.
The West Texas Intermediate (WTI) crude for August delivery rose 2.4% to end at $75.23 a barrel on the New York Mercantile Exchange, the highest finish since October 2018. Similarly, September Brent crude, the global benchmark, was up 1.6% to settle at $75.84 a barrel on ICE Futures Europe.
Consequently, shares of oil behemoths like Chevron Corp. (CVX - Free Report) , ConocoPhillips (COP - Free Report) and EOG Resources Inc. (EOG - Free Report) rallied 1.4%, 3.3% and 3.1%, respectively. All these stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Economic Data
The Department of labor reported that weekly jobless claims fell 51,000 to 364,000 for the week ended Jun 26, marking its lowest for the week ended Mar 14, 2020. Previous week's data was revised upwardly to 415,000. The consensus estimate was 385,000.
However, the continuing claims (those who have already received unemployment benefit) increased 56,000 to 3.47 million for the week ended Jun 21. The four-week moving average (eliminating weekly volatility) for continuing claims, fell by 75,000 to 3.48 million, the lowest since the week ended Mar 21, 2020.
The total number Americans receiving benefits across all types government programs decreased by 180,890 to 14.66 million for the week ended Jun 14. However, nearly 7 million workers are yet to return to the job market compared with the pre-pandemic level.
The Institute of Supply Management (ISM) have reported that its manufacturing purchasing managers' index (PMI) for June dropped slightly to 60.6% from 61.2% in May. The consensus estimate was 60.8%. Likewise, the IHS Markit reported that its manufacturing PMI for June decreased to 62.1% compared with a flash estimate of 62.6%, but unchanged from the May final reading.
Notably, any reading above 50 means expansions in manufacturing activities and a reading above 55 means strong expansions. Therefore, despite a slight drop in June reading of both the ISM and IHS Markit, U.S. manufacturing remains rock solid in June.
The Department of Commerce reported that construction spending fell 0.3% in May at a seasonally adjusted annual rate of $1.55 trillion. The consensus estimate was for a gain of 0.5%. April's data was revised upward from 0.2% to 0.5%.
The CBO have estimated that the U.S. budget deficit will hit $3 trillion for the fiscal 2021. The figure will be 13.4% of the GDP marking the second-largest since 1945.
Zacks' Top Picks to Cash in on Artificial Intelligence
In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.
See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>