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With the foot on the gas and today Wall defying the recession

For about two hours, investors’ concerns about the contraction of the US GDP seemed to last, as from then on the indices started to pick up the losses and with the buyers in the reins of the session until the end they continued where they had left off yesterday.

In particular, the Dow Jones industrial index ended on 32,529 units with rise 1.03%the enlarged S&P 500 reinforced by 1.2% moving on 4,072 unitsas well as the technologically weighted one Nasdaq which closed in +1.08% and them 12,162 units.

As mentioned above, after a brief move into negative territory in the wake of data that showed GDP contracted for a second straight quarter – the technical definition of a recession – indices put concerns behind them and moved convincingly higher until the closing bell.

In particular, US GDP fell again at an annual rate of 0.9%, while the average estimate of analysts in Reuters expected a rise of 0.5%.

“While it was definitely on the downside of estimates, keep in mind that a 1% decline is relatively small and supports the view that any recessionary environment will be mild,” notes E-Trade’s Mike Loewengart.

In any case, the indices appeared to maintain the momentum of yesterday’s extremely strong session, with gains of more than 2%, as Fed Governor Jerome Powell’s statements, after the – expected – second consecutive increase in interest rates by 0.75%, appeared to significantly reassure investors.

The Fed chairman did not rule out another aggressive hike, perhaps as much as 75 basis points again, but indicated that as the bank moves to further tighten monetary policy, it seems more appropriate to slow the pace of hikes.

In this climate, after all, Jeffrey Gundlach, the CEO of DoubleLine Capital, expressed on CNBC yesterday his belief that the US central bank is no longer behind inflation and that Powell has regained his credibility.

In any case, the market seems to have long discounted the recession – technical or real – and today’s data only seemed to confirm the belief.

On a positive note, with the labor market remaining extremely strong, a contraction in economic activity of less than 1% may represent the least possible cost of dealing with inflation.

Elsewhere, the stock of Meta, the parent of Facebook, closed at -5.2% after the disappointing results announced yesterday by Mark Zuckenberg’s giant.

The company’s second-quarter numbers came in slightly below market estimates, but more concern was caused by the fact that it significantly downgraded its revenue estimates for the next quarter.

Comcast saw its stock plunge nearly 10% after the cable giant said it failed to grow subscribers for the first time in its history.

More broadly, however, with almost half of the S&P 500 companies having reported results so far, 71.5% have beaten market estimates, which appears to have provided a significant boost to investment sentiment.

Finally, in the rest of the day’s macroeconomic news, after three straight weeks of gains, initial jobless claims fell slightly by 5,000 to 256,000 for the week ended July 23.

Source: Capital

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