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Morning Blast: Q1 GDP; Big Banks Unstressed; AMC Goes to Court; Joby Aviation Can Fly

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Premarket action on Thursday had the three major U.S. indexes trading higher. The Dow Jones industrials were up 0.29%, the S&P 500 up 0.31% and the Nasdaq 0.41% higher.

Before U.S. markets open on Thursday, the  Bureau of Economic Analysis will release its third estimate of first-quarter gross domestic product (GDP). Economists are expecting the GDP to have increased by 1.3% in the first quarter, unchanged from the second estimate released last month. The GDP deflator is also expected to come in unchanged at 4.2%.

The country’s 23 largest banks all passed the 2023 stress test that hypothesized a recession resulting in projected losses of $541 billion. In its announcement, the Federal Reserve said the results “demonstrate that large banks are well positioned to weather a severe recession and continue to lend to households and businesses even during a severe recession.”

Citigroup, JPMorgan and Wells Fargo will report second-quarter results on July 14, kicking off the new quarterly earnings season. Their investors will be looking for dividend hikes and share buybacks.

On a different note, AMC Entertainment Holdings Inc. (NYSE: AMC) begins a scheduled two-day hearing in Delaware Chancery Court (case number 2023-0215) related to a proposed class action settlement to resolve a dispute with some shareholders who want to opt out of the settlement and file their own lawsuits against the company.

Disgruntled shareholders claim that AMC’s conversion of preferred shares (NYSE: APE) to common shares was rigged to allow the company to get what it wanted: the ability to issue more stock in order to raise cash to pay off crippling debt. The judge in the case has stopped payment of the settlement until this hearing is concluded.

Electric vertical take-off and landing (eVTOL) aircraft maker Joby Aviation Inc. (NYSE: JOBY) on Wednesday received authorization from the Federal Aviation Administration to conduct test flights for the first of its aircraft built on the company’s manufacturing production line. Joby has been flying pre-production models since receiving FAA approval in late 2019, and the company said the aircraft have flown more than 30,000 miles since then.

Toyota Motor Corp. (NYSE: TM) has invested more than $400 million in the company, and the Japanese automaker’s North American CEO, Tetsuo Ogawa, will join Joby’s board on July 1. The two companies have also signed a long-term agreement for powertrains and other components. Toyota will manufacture the Joby-designed parts and deliver finished assemblies to Joby’s production line in Marina, California.

Joby also announced Thursday morning that South Korea’s SK Telecom Co. Ltd. (NYSE: SKM) acquired 15.04 million shares of Joby stock for $100 million ($6.65 per share) earlier this week and that the two companies have expanded their partnership in the Korean government’s demonstration program that is intended to whip up interest in aerial ridesharing in the country.

Joby’s stock jumped 40% on Wednesday and traded up nearly 10% in Thursday’s premarket. The stock’s 52-week trading range is $3.15 to $9.17. The high was posted Wednesday, and shares were trading at around $9.70 Thursday morning.

Here is a look at how U.S. markets fared on Wednesday.

Seven of 11 market sectors closed lower. Utilities (−1.48%) and materials (−0.68%) posted the day’s worst losses. Energy (1.02%) and communications services (0.80%) posted the day’s best gains. The Dow closed down 0.22% and the S&P 500 down 0.04%, while the Nasdaq ended Wednesday 0.27% higher.

Two-year Treasuries dropped three basis points to end the day at 4.71% on Wednesday, and 10-year notes fell by six basis points to 3.71%. In Wednesday’s premarket, two-year notes were trading at around 4.77% and 10-year notes at about 3.75%.

In addition to the GDP report due out Thursday morning, the weekly report on new claims for unemployment benefits will be released before markets open. New claims are expected to rise slightly from 264,000 in the prior week to 266,000 last week. Continuing claims for the week ended June 10 totaled 1.76 million, down from 1.77 million in the previous week.

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