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Markets Today 

  • S&P 500 (SPY): +0.98%
  • Nasdaq (QQQ): +1.49%
  • Dow Jones (DIA): +0.70%
  • Russell 2000 (IWM): +1.20%
  • Volatility Index (VIX): +0.35%
  • Apple (AAPL): +2.16%
  • Amazon (AMZN): +3.20%
  • Advanced Micro Devices (AMD): -1.58%
  • Altria (MO): +2.43%
  • Cloudflare (NET): +8.05%
  • Block (SQ): +10.63%
  • Bank of America (BAC): -1.60%
  • Exxon Mobil (XOM): -3.02%

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Summary

US stocks closed higher in a very choppy session following Federal Reserve’s Chair Jerome Powell second day of testimony before Congress. Stocks are on pace for an up week if gains hold through Friday’s close. Last week, the S&P 500 fell 5.8%, the most since March 2020, and marking the benchmark’s second back-to-back weekly loss of more than 5%.

US jobless claims remained near a five-month high, a sign that the labor market is starting to cool down amid record inflation and low unemployment. The Labor Department reported that first time jobless claims totalled 229,000 for the week, higher than the 226,00 expected by economists. 

Elsewhere in economic data, the preliminary S&P Global Composite Purchasing Managers’ Index (PMI) for June came in at 51.2, the weakest level since January and second-weakest reading for the index since the height of the pandemic in mid-2020 — another sign of possible economic deterioration.

Fed Chair Jerome Powell remains in the spotlight as he delivers the second day of his semi-annual monetary policy testimony before Congress. Powell told Congress that the Fed is strongly committed to bringing down inflation and conceded that a recession was a “possibility” and acknowledged that a soft landing would be “very challenging”.  

Powell reiterated that ongoing increases in the Fed’s policy rate would be appropriate, with the exact pace dependent on the economic outlook. He declined to rule out a 100-basis-point move if it proved warranted. “Inflation has obviously surprised to the upside over the past year, and further surprises could be in store.”

In a note to clients, strategists at BlackRock wrote, “The Fed seems dead set on raising rates this year to levels that, in our view, would clearly slow the economy. It seems to be responding to the ‘politics’ of current high inflation, but the Fed isn’t actually looking to slow the economy. The Fed isn’t looking for a recession, even though in our view one would be needed if it wanted to drive inflation back down to 2%”.

Highlights

  • Occidental Petroleum (OXY) stock rose more than 4% at open (but was unable to sustain those gains) after Warren Buffet’s Berkshire Hathaway bought 9.6 million more shares, bringing BRK’s position to 152.7 million shares worth roughly $8.52 billion.
  • Rite Aid (RAD) shares rose roughly 6% after the drugstore reported smaller than expected losses.  The company posted an adjusted loss of 60 cents per share, coming in below the loss of 66 cents per share Bloomberg consensus estimates had projected and raised revenue guidance. 
  • Snowflake (SNOW) shares surged nearly 9% after JP Morgan upgraded to the from Neutral to Overweight and placed a $165 price target. 
  • The FDA banned electronic cigarettes company Juul from selling its products in the US, a major blow to Altria (MO), who bought a $12 billion stake in Juul in 2018 that is now effectively worthless
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  • The US Federal Reserve on Thursday gave passing grades to all 33 of the country’s biggest banks in annual stress tests, which gauged each lender’s ability to weather a severe economic downturn.  In a series of doomsday hypothetical scenarios drafted by the Fed, the banks would collectively lose $612bn, and the group’s capital ratios would decline to 9.7 per cent, more than double the minimum requirement, the Fed said. 
  • Netflix (NFLX) cuts lays off 300 workers, the latest sign of trouble after the company reported its first ever loss in subscribers last quarter.
  • Workers at at a Chipotle (CMG) restaurant are seeking to unionize, the first for the company. 
  • An Italian company’s hacking tools were used to spy on Apple Inc and Android smartphones in Italy and Kazakhstan, Alphabet Inc’s Google said in a report on Thursday.
  • Ford Motor Co said on Wednesday it will start producing electric vehicles in Spain later this decade but that would imply “significant” job cuts at its Spanish factory and another one in Germany amid its ambitious electrification push in Europe.

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