Stocks closed mostly higher Thursday after the latest round of economic data eased recession worries and financial shares jumped following the results of the Federal Reserve's annual stress test.
On the economic front, the final reading on gross domestic product (GDP) showed the U.S. economy grew at a 2% annualized pace in the first quarter, up from the previous reading of 1.3%. "The updated estimates primarily reflected upward revisions to exports and consumer spending that were partly offset by downward revisions to non-residential fixed investment and federal government spending," the report from the Bureau of Economic Analysis stated.
Elsewhere, data from the Labor Department showed that initial jobless claims fell by 26,000 last week to a seasonally adjusted 239,000, their lowest level since late May.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
While today's data fuels "optimism of a stronger and more resilient economy than previously thought," it also reinforces "the likelihood that the central bank will remain considerably more hawkish than investors anticipate," says José Torres, senior economist at Interactive Brokers.
Financial stocks boost Dow, S&P 500
Still, two of the three major indexes finished higher thanks to strength in financial stocks. The sector got a boost after the Fed released the results of its annual stress tests. These tests, which were created after the 2008 financial crisis, use hypothetical situations to measure how well the country's biggest banks could weather an extreme economic downturn. They also determine the amount of capital these big lenders can return to shareholders through stock buybacks and dividends.
Solid results this time around created tailwinds for the financial sector, with Dow stocks JPMorgan Chase (JPM, +3.5%) and Goldman Sachs (GS, +3.0%) being two of the biggest gainers Thursday.
As a result, the blue chip Dow Jones Industrial Average outperformed today, adding 0.8% to 34,122. The S&P 500 also gained ground, rising 0.5% to 4,396, while the Nasdaq Composite closed marginally lower at 13,591.
The best QQQ stocks
Despite today's slight decline, the Nasdaq is still headed toward an impressive first-half return, up 30% with one more session to go. This will mark the index's best 1H performance on record, according to Adam Turnquist, chief technical strategist for LPL Financial. And while there will likely be some bumps in the road going forward, "including the prospect of further rate hikes from the Fed, stubbornly high inflation, interest rate volatility and elevated recession risk," Turnquist says history suggests this strength could continue through the second half of the year.
We've mentioned in this space several times how investors can ride the momentum of the market, including scooping up the best tech stocks, the best growth stocks and – in the most talked-about trend on Wall Street right now – the best artificial intelligence (AI) stocks.
Another tack is to drill down on stocks in the Invesco QQQ Trust (QQQ), the exchange-traded fund that tracks the tech-heavy Nasdaq-100 Index (NDX). The fund has a long history of outperformance and more recently has seen strong returns thanks to surging demand for generative AI. Here, we take a look at nine of the best QQQ stocks for growth and innovation – and potential upside in the second half of the year. Check them out.
Related Content
-
A Guide to Music Streaming ServicesDeals Our guide to music streaming services from Spotify to Amazon Music, Tidal to Apple Music and how to find music streaming deals.
-
Stock Market Today: Markets Reflect Global UncertaintyExuberance fades as investors confront micro challenges and a murkier macro environment.
-
Why Is Warren Buffett Selling So Much Stock?Berkshire Hathaway is dumping equities, hoarding cash and making market participants nervous.
-
Stock Market Today: Stocks Pause as Investors Assess Fed PolicyThe Federal Reserve met expectations with a quarter-point rate cut.
-
Fed Cuts Rates Again: What the Experts Are SayingFederal Reserve The central bank continued to ease, but a new administration in Washington clouds the outlook for future policy moves.
-
Stock Market Today: Dow Jumps 1,500 Points on Election OutcomeThe removal of election uncertainty unleashed a powerful rally in equity markets.
-
If You'd Put $1,000 Into Google Stock 20 Years Ago, Here's What You'd Have TodayGoogle parent Alphabet has been a market-beating machine for ages.
-
Stock Market Today: Markets March Higher as Strong Earnings Offset Weakness in ChipsUpbeat quarterly results helped stocks bounce back with broad-based gains.
-
Stock Market Today: UnitedHealth Selloff Drags on DowWhile the main indexes ended in the red, Walgreens Boots Alliance had its best day since 2008.
-
Is Goldman Sachs Stock Still a Buy After Earnings?Goldman Sachs stock is struggling for direction Tuesday even after the financial giant beat expectations for its third quarter. Here's what you need to know.
