US stocks
Wall Street opened higher, Thursday, as bank stocks rose after the major banks passed the annual stress test of the US Federal Reserve, while economic data indicated resilience in the US economy in the face of large hikes in interest rates.
All 23 banks tested passed the Fed’s hypothetical stress scenario this year, which included a scenario of high unemployment to 10 percent and severe erosion in commercial real estate values.
Banks are expected to announce their share buyback and dividend plans after the closing bell on Friday.
But banks may be conservative with their dividends this year, as regulators including the Federal Reserve consider imposing more capital rules and supervision, after several regional banks failed this year.
Federal Reserve Chairman Jerome Powell has said that regulators need to learn lessons from those failures.
Powell’s comments come after he told the Senate this month that the new rules would likely apply to the eight largest banks, adding that they could face a 20 percent increase in the amount of capital they are required to keep on their books to protect against shocks.
The Fed is preparing for its next policy meeting in July, where markets are betting that the central bank will raise interest rates by another quarter of a percentage point.
On the other hand, the last reading of the US economy’s gross domestic product for the first quarter came with a growth of 2 percent, which was stronger than the expected 1.4 percent.
Meanwhile, filings for initial unemployment benefits were at 239K, slightly less than expected.
Powell said Wednesday that the Fed may raise interest rates again this year as it continues to fight inflation.
He also said that he does not see inflation falling to the 2 percent target this year or next, which means the bank will have to remain vigilant in its battle against inflation.
Market movements
The Dow Jones Industrial Average rose 230.65 points, or 0.68 percent, to 34,083.31 points, by 15:30 GMT, and the Standard & Poor’s 500 Index rose by 13.08 points, or 0.30 percent, to 4,389.94 points, and the Nasdaq Composite Index rose 9.12 points, or 0.06 percent. to 13,600.30 points.
In bank stocks, Bank of America shares rose 2.21 percent, JP Morgan Chase rose 2.84 percent, Goldman Sachs rose 3.55 percent, and Wells Fargo rose 2.99 percent.
Apple shares also slowly approached a market value of $3 trillion, making the iPhone maker the first company to reach that level. Shares closed at a 52-week high on Wednesday.
2023-06-29 15:45:18
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