Midday report: U.S. stock indexes and Treasuries up ahead of federal balance sheet release

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Benchmarks for U.S. equities were trending higher, led by the Nasdaq Composite, while government bonds also rose after midday on Thursday.

The Dow Jones Industrial Average rose 1.7% to 32,676.07 after midday Thursday. The S&P 500 climbed 2.1% to 4,064.24, and the Nasdaq Composite rose 2.9% to 11,767.63.

The Chicago Board of Options Exchange’s Market Volatility Index, or VIX, a measure of implied volatility based on the prices of a basket of S&P 500 index options with 30-day expiration, fell by more than 3% to 0.97.

The US 10-year yield rose less than a basis point to 2.78%.

West Texas Intermediate crude oil futures rose 3.8% to $114.56 a barrel.

Traders will be eagerly awaiting the Fed’s statement, scheduled for release at 4:30 p.m. ET. At its recent meeting, the Federal Open Market Committee laid out a plan to reduce the Fed’s $9 trillion balance sheet of mostly Treasuries and mortgage-backed securities.

Minutes from May’s FOMC meeting showed the committee is “eager” to raise rates “quickly” to reduce inflation, but also to prepare to “potentially cut rates more quickly to spur growth.” economy after a more severe or prolonged economic contraction”. said chief economist Lindsey Piegza.

In the second half of the year, the Fed is likely to struggle to justify a continued sustained pace of rate hikes as “weakness becomes increasingly – and overwhelmingly – apparent,” the Stifel research note says, adding that the Fed is advised to adopt a slower pace of rate hikes come September if the goal is to achieve some kind of “soft” landing.

Consumer discretionary and technology were the main gainers in Thursday afternoon trading, followed closely by communication services and industrials.

In corporate news, Build-A-Bear Workshop (BBW) gained more than 17% after reporting first-quarter net profit of $0.89 per share, beating a single analyst’s estimate that expects him to earn $0.66 per share. Similarly, Macy’s (M) jumped nearly 18% after beating Wall Street expectations with its first-quarter results and also raised its FY23 profit forecast above analyst consensus.

Vinco Ventures (BBIG) fell nearly 14% after announcing that it would postpone the planned May 27 spin-off of its blockchain technologies subsidiary Cryptyde (TYDE) until the end of its current Q2 ending on May 30. June due to certain contractual and regulatory conditions.

Gold was slightly higher at $1,848 an ounce, and silver rose 0.5% to $22 an ounce. Among energy ETFs, the United States Oil Fund rose 2.8% to $84.7 and the United States Natural Gas Fund rose 1% to $31.

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