U.S. Stocks Mostly Higher Amid Volatile Session

U.S. Stocks Mostly Higher Amid Volatile Session

July 28, 2022

After moving notably higher over the two previous sessions, stocks have seen considerable volatility during trading on Thursday. The major averages have spent the day showing wild swings back and forth across the unchanged line.

Currently, the major averages are all in positive territory, with the tech-heavy Nasdaq posting a standout gain. While the Nasdaq is up 127.31 points or 1.1 percent at 12,024.96, the S&P 500 is up 25.96 points or 0.7 percent at 3,985.87 and the Dow is up 40.11 points or 0.1 percent at 31,914.95.

The volatility on Wall Street comes as traders express some uncertainty about the outlook for the markets after the advance seen during yesterday’s trading lifted the major averages to their best closing levels in over a month.

The Federal Reserve’s monetary policy decision next week also continues to weigh on investors’ minds amid concerns aggressive interest rate hikes could tip the economy into a recession.

Earlier this morning, the European Central Bank announced its decision to raise interest rates by 50 basis points, marking the first rate hike in over a decade.

“The Governing Council judged that it is appropriate to take a larger first step on its policy rate normalisation path than signalled at its previous meeting,” the ECB said.

The Nasdaq is benefiting from a significant advance by shares of Tesla (TSLA), with the electric vehicle marker spiking by 9.5 percent after reporting second quarter earnings that beat expectations.

On the U.S. economic front, the Labor Department released a report unexpectedly showing another modest increase in first-time claims for U.S. unemployment benefits in the week ended July 16th.

The report showed initial jobless claims crept up to 251,000, an increase of 7,000 from the previous week’s unrevised level of 244,000. The uptick surprised economists, who had expected jobless claims to edge down to 240,000.

Jobless claims inched higher for the third straight week, reaching their highest level since hitting 265,000 in the week ended November 13, 2021.

A separate report released by the Federal Reserve Bank of Philadelphia showed regional manufacturing activity unexpectedly contracted at a faster rate in the month of July.

The Philly Fed said its current general activity index slumped to a negative 12.3 in July from a negative 3.3 in June, with a negative reading indicating a contraction in regional manufacturing activity. Economists had expected the index to rebound to a positive 0.4.

The Conference Board also released a report showing its index of leading economic indicators decreased for the fourth straight month in June.

The Conference Board said its leading economic index slumped by 0.8 percent in June after falling by a revised 0.6 percent in May.

Economists had expected the leading economic index to decline by 0.5 percent compared to the 0.4 percent drop originally reported for the previous month.

Sector News

Housing stocks have moved sharply higher over the course of the session, driving the Philadelphia Housing Sector Index up by 1.8 percent to its best intraday level in well over a month.

Homebuilder D.R. Horton (DHI) has helped to lead the housing sector higher after reporting better than expected fiscal third quarter earnings.

Considerable strength has also emerged among computer hardware stocks, as reflected by the 1.7 percent gain being posted by the NYSE Arca Computer Hardware Index. The index has also reached a monthly intraday high.

On the other hand, energy stocks continue to see substantial weakness, moving sharply lower along with the price of crude oil. Crude for September delivery is tumbling $2.96 to $96.92 a barrel amid concerns about the outlook for demand.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index is down by 4.9 percent, the NYSE Arca Oil Index is down by 2.9 percent and the NYSE Arca Natural Gas Index is down by 1.4 percent.

Airline stocks also continue to see significant weakness, resulting in a 2.9 percent nosedive by the NYSE Arca Airline Index.

United Airlines (UAL) and American Airlines (AAL) are posting steep losses after reporting weaker than expected second quarter earnings.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan’s Nikkei 225 Index climbed by 0.4 percent, while China’s Shanghai Composite Index slumped by 1 percent.

The major European markets also finished the day mixed. While the German DAX Index dipped by 0.3 percent, the U.K.’s FTSE 100 Index inched up by 0.1 percent and the French CAC 40 Index rose by 0.3 percent.

In the bond market, treasuries have moved sharply higher after seeing initial weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 8 basis points at 2.956 percent.

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