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Stocks gained ground Thursday as investors sized up a pair of not-so-bad economic reports ahead of tomorrow's appearance by Fed Chair Jerome Powell at the central bank's annual symposium in Jackson Hole, Wyoming.
This morning, the Labor Department said that weekly jobless claims fell to a one-month low of 243,000 last week, down from the previous week's revised 245,000. A separate report from the Commerce Department showed gross domestic product (GDP) declined 0.6% in the second quarter, an improvement over the 0.9% drop seen in the initial reading that was released last month – a reading that sparked plenty of recession chatter around Wall Street.
But all eyes remain on Jackson Hole. "As we await Chair Powell tomorrow, other officials have started on the media circuit," says Michael Reinking, senior market strategist at the New York Stock Exchange. "The tone of the commentary has been hawkish but has been very much in line with what we've heard post the [July] Federal Open Market Committee meeting. The key themes have centered around remaining committed to taming inflation." Reinking adds that while most central bank officials are holding monetary policy decisions for September's Fed meeting "close to the vest" as they wait for the next round of economic data, they are also hinting that we're not quite at a level where they can stop hiking rates.
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Today's gains were broad-based, with the materials (+2.3%) and the communication services (+2.0%) sectors faring the best. As for the major indexes, the Nasdaq Composite rose 1.7% to 12,639, the S&P 500 Index climbed 1.4% to 4,199, and the Dow Jones Industrial Average tacked on 1.0% to 33,291.
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Other news in the stock market today:
Oil prices had another miserable day, but energy stocks could still have some fuel left in the tank. U.S. crude futures fell 2.5% today to settle at $92.52 per barrel, and are now down more than 24% from their mid-June highs above $122.
Still, Jeff Buchbinder, chief equity strategist at independent broker-dealer LPL Financial, says there are three conditions currently in place for the energy sector that are creating a "potential attractive opportunity" for investors. Specifically, Buchbinder believes some of the best investment opportunities occur when the following circumstances are unfolding: "1) the market is pricing in a pessimistic outlook in the form of lower valuations, 2) earnings estimates are being revised higher and growth is accelerating, and 3) technical analysis indicators suggest an impending rebound." The strategist sees all three conditions present in energy stocks right now.
If that's not enough to convince you, Buchbinder says to "Follow Warren." By this he means Warren Buffett, whose Berkshire Hathaway (BRK.B) holding company has been big buyers of oil & gas stocks in 2022. With that in mind, take a look at seven energy stocks that could be among the best ideas for investors for the remainder of this year.
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