Thursday July 28th


Stock futures rebound and are little changed even after GDP contracts for a second time

U.S. stock index futures rebounded on Thursday even after the latest GDP showed a second-straight contraction as investors bet the economic downturn would soon cause the Federal Reserve to end its aggressive hiking campaign. Futures tied to the Dow Jones Industrial Average added about 1 point. S&P 500 futures were flat and Nasdaq 100 futures shed 0.2%. Futures were much lower before the report. U.S. economic growth fell 0.9% in the second quarter, the Bureau of Economic Analysis reported. The Dow Jones estimate was for a gain of 0.3%. First-quarter GDP declined by 1.6%. Investors have grown increasingly concerned in recent months that the Fed’s attempts to tame surging prices would move the economy closer to a recession. Many characterize a recession as having two back-to-back negative quarters of economic growth. It’s more nuanced than that though, according to the National Bureau of Economic Research, the official arbiter of recessions, which considers several additional factors. The moves come on the heels of a broad-based rally Wednesday after the Fed’s latest monetary policy decision, as investors continued to bet on whether the central bank can halt surging prices without pushing the economy into a recession. Following the rate hike from the Fed, DoubleLine Capital’s CEO Jeffrey Gundlach told CNBC’s “Closing Bell Overtime” he believes the central bank is no longer behind the curve on inflation and Powell has regained credibility. “This market reaction seems less of a sugar high than the prior two in June and May,” Gundlach said. The Dow jumped more than 400 points in the previous session, while the S&P 500 and Nasdaq Composite added 2.6% and 4.06%, respectively. All S&P 500 sectors ended the day higher, with communications services posting its best daily performance since April 2020. On the earnings front, investors are looking ahead to results from Apple, Amazon, Intel and Roku slated for after the bell. Shares in the Asia-Pacific region were mostly higher on Thursday following the U.S. Federal Reserve’s decision to raise rates by 75 basis points to fight inflation, a move that was widely expected. Among the major markets, only Hong Kong shares slipped. The benchmark Hang Seng index was 0.2% lower in the final hour of trade following a Thursday rate hike by the central bank. The Kospi in South Korea advanced 0.82% to 2,435.27, while the Kosdaq gained 0.33% to 798.32. Mainland China markets rose. The Shanghai Composite gained 0.23% to 3,283.14 while the Shenzhen Component was up 0.23% at 12,428.72. Japan’s Nikkei 225 was 0.36% higher at 27,815.48, while the Topix index inched up 0.16% to 1,948.85. Oil rose more than $1 a barrel on Thursday, extending gains from the previous session, buoyed by improved risk appetite among investors as lower crude inventories and a rebound in gasoline demand in the United States supported prices. Brent crude futures for September rose $1.32, or 1.24%, to $107.94 a barrel, after gaining $2.22 on Wednesday. U.S. West Texas Intermediate crude (WTI) was at $98.93, for a gain of $1.67, or 1.7%, after rising $2.28 in the previous session. Gold prices hit a near three-week high on Thursday after U.S. Federal Reserve chair Jerome Powell signaled the central bank could slow the pace of rate hikes in coming months, which weighed on the dollar and Treasury yields. Spot gold rose 0.7% to $1,745.20 per ounce by 0912 GMT, its highest since July 8. Later in the morning, it was up 0.52% at $1,742.77. U.S. gold futures rose 1.23% to $1,740.6.