What’s driving markets

A raft of encouraging economic data and waning banking-sector fears helped drive U.S. stocks higher on Thursday, analysts said.

“Another day without any unwelcome banking surprises lifted markets as investors headed back towards a risk-on approach,” said Richard Hunter, head of markets at Interactive Investor.

Analysts also noted an improvement in market breadth, as cyclical sectors like industrials, materials and financials that have suffered in recent weeks helping to push the market higher. Although the technology-heavy Nasdaq remained in the lead, benefiting from the perception of safety.

See: Tech stocks back as a haven? ‘It’s a mistake,’ say market analysts

The S&P 500 index closed above the 4,000 mark once again on Wednesday, an important technical accomplishment that stoked hopes for a further rally.

Technical analyst Katie Stockton of Fairlead Strategies said in a note to clients that a breakout above 4,050 on the S&P 500 could help to propel the index back to its highest levels of the year, reached in early February.

She also noted that “breadth has improved as cyclical sectors have reversed an oversold bounce” in a note to clients.

Revised data on U.S. GDP growth showed the economy grew slightly more slowly during the final months of 2022, with the annualized growth rate slipping to 2.6% from 2.7% seen in the previous estimate. Slightly weaker exports and consumer spending were to blame, according to data released by the Bureau of Economic Analysis.

Meanwhile, weekly jobless claims data showed the number of Americans applying for new unemployment benefits ticked higher to 198,000 during the week ended March 25, up from 191,000 during the prior week. The reading surpassed the median estimate from economists polled by the Wall Street Journal, who had expected 195,000 initial claims.

The data helped support the case for the Fed to end its rate-hike campaign, said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office.

“A tick up in jobless claims within the context of a downward-revised GDP could suggest Fed action is taking its toll, but it’s important to keep in mind that those claims are still relatively low, and GDP still shows growth,” Loewengart said in a note to clients.

To be sure, investors should avoid getting too excited since plenty more economic data reports are due out ahead of the conclusion of the Fed’s next two-day policy meeting, which ends May 3.

For example, the personal consumption expenditures index for February is due out Friday. The gauge is the Fed’s preferred measure of consumer price inflation, informing the central bank’s efforts to drive inflation back to its 2% target.

A batch of Fed officials are due to make public comments on Thursday. Boston Fed President Collins and Richmond Fed President Barkin are speaking at 12:45 p.m., with Minneapolis Fed President Kashkari taking the mic at 1 p.m.

After the bell, the Fed is expected to release its H.4.1 report on bank lending at 4:30 p.m. Eastern Time.

Companies in focus

Roku Inc. shares
ROKU,
-5.16%
fell after the streaming company said it would lay off 200 employees and exit some office facilities.

EVgo Inc.‘s stock 
EVGO,
+20.70%
rallied after the electric-vehicle charging infrastructure company reported a near four-fold forecast-beating climb in revenue, as losses narrowed sharply.

The SPDR S&P Regional Banking exchange-traded fund
KRE,
-1.77%
turned lower after climbing earlier in the session, although it remained on track for a second-straight weekly gain. Within the ETF, shares of First Republic Bank
FRC,
-4.66%,
PacWest Bancorp
PACW,
-4.72%
and of Western Alliance Bancorp
WAL,
-1.62%
also turned lower after opening in the green.

RH
RH,
-2.21%
which operates furniture retailer Restoration Hardware, fell after the group logged a decline in profit and sales in the latest quarter, reflecting ongoing challenges stemming from a slower economy.