DJIA Futures: +105 (+0.3%)
SPX Futures: +10 (+0.2%)
NASDAQ Futures: +29 (+0.2%)
Good morning friends!
Futures are higher as bank and tech stocks jump.
Let’s get right to it!
The U.S. economy grew much faster than previously estimated in the first quarter.
The Commerce Department revised Q1 GDP growth sharply higher to 2% from 1.3% previously.
That beat expectations for the final revision to come in at 1.4%.
The revision was due to stronger consumer spending and exports than previously estimated.
Treasury yields jumped following the release of that data as it signals the U.S. may be further from a recession than though.
The 2-year yield is up 16 basis points to 4.88% while the 10-year yield is up 9 basis points to 3.80%.
Big bank stocks are up ahead of the open after passing the Fed’s annual stress test on Wednesday.
JPMorgan Chase (JPM) shares are up 1.5%, Wells Fargo (WFC) shares are 1.7% higher, and Bank of America (BAC) is up 2%.
Other bank stocks are also rising with the Financial Select Sector SPDR ETF (XLF) up 0.8% and the SPDR S&P Regional Banking ETF (KRE) up 1.9%.
The Fed said all 23 banks included in the stress weathered a severe recession scenario while continuing to lend to consumers and corporations.
In the hypothetical recession, all banks were able to maintain minimum capital levels.
This year’s test included a “severe global recession” with 10% unemployment, a 40% decline in commercial real estate values, and 38% drop in housing prices.
The Fed’s vice chair for supervision, Michael Barr, said, “Today’s results confirm that the banking system remains strong and resilient. At the same time, this stress test is only one way to measure that strength. We should remain humble about how risks can arise and continue our work to ensure that banks are resilient to a range of economic scenarios, market shocks, and other stresses.”
Weekly jobless claims dropped to the lowest level in a month last week.
The Labor Department reported 239,000 Americans filed initial claims for unemployment benefits.
That was down by 26,000 from the week before and well below expectations for 265,000.
It was the largest drop since October 2021.
Continuing claims decreased by 20,000 to 1.74 million in the week ending June 17 vs 1.77 million expected.
Fed Chair Jerome Powell reiterated the central bank’s plans for more rate hikes during a panel discussion in Portugal on Wednesday.
Powell told the European Central Bank Forum “We believe there’s more restriction coming. What’s really driving it … is a very strong labor market.”
The comments supported the Fed’s plan for two more 25bps rate hikes this year.
CME Group’s FedWatch Tool currently shows 86.8% of traders betting on a rate hike at the July 26 meeting.
Micron (MU) shares are rising 2.2% in premarket trade after beating fiscal Q3 expectations on the top and bottom line.
Here’s how the chipmaker’s results compared to analysts’ estimates:
Revenue was down 57% year over year.
For fiscal Q4, Micron forecast $3.9 billion in revenue which was in line with estimates.
The National Association of Realtors reports pending home sales for May at 10:00 a.m. ET.
That data is expected to show pending sales were unchanged last month.
Pending sales represent the number of contracts signed to purchase a home, with those sales expected to close in 30 to 60 days.
This is a leading indicator for existing home sales.