us stock indexes were trading higher on thursday boosted by financial shares after the nations 23 largest banks passed the federal reserves stress test while revisions to firstquarter gdp data showed the us economy grew at a much faster pace than previously expected prompting a move higher in treasury yields on wednesday the dow jones industrial average fell 74 points or 022 to 33853 the sp 500 declined 2 points or 004 to 4377 and the nasdaq composite gained 36 points or 027 to 13592 financial stocks got a boost thursday after the countrys largest lenders passed the feds annual stress tests in which 23 banks proved they could withstand a hypothetical severe global recession and losses of up to 541 billion as well as a 40 decline in commercial real estate prices the invesco kbw regional banking etf kbwr jumped 21 and the spdr sp bank etf kbe rose 2 the us banking sector has stabilized helping avoid a fullblown credit crunch but the shock represents another headwind for bank lending and broader us activity and risks have not fully dissipated for more vulnerable banks or the sector as a whole said james mccann deputy chief economist at abrdn in particular banks with large fixed income holdings less sticky deposits exposure to commercial real estate lending and poor geographic diversification remain at risk he said us stocks were also helped by data showing the economy grew at a solid 2 annual rate in the first quarter of 2023 while the weekly jobless benefit claims dropped to fourweek low pointing to continued strength in the us labor market gross domestic product was revised up from a previously reported 13 growth rate the commerce department said thursday undercutting widespread expectations that the us economy is heading toward a recession the us economy is also expected to expand between 1 to 2 in the second quarter that ends on friday based on the most recent wall street forecasts meanwhile the number of americans who applied for unemployment benefits last week fell to a onemonth low of 239000 new jobless claims declined by 26000 from a revised 265000 in the prior week carol schleif chief investment officer at bmo family office said thursdays strongerthanexpected gdp data is further confirmation that the us economy is in stronger shape than many expected and is supportive of the federal reserves higher for longer policy when it comes to interest rates at the same time the modest downturn in initial and continuing jobless claims data confirms the strength of the labor market as long as the labor market remains strong it will be difficult for the economy to slip into a recession schleif said earlier federal reserve chair jerome powell as well as his colleagues from europe and japan each reinforced their willingness to combat inflation at the ecb annual forum in sintra portugal on wednesday powell reiterated the theme in madrid spain on thursday the risks of overdoing or underdoing rate hikes still are not in the balance yet see powell says risks of overdoing or underdoing rate hikes still arent in balance yet the yield on the 2year treasury gained 18 basis points to trade at 4899 on thursday morning from 477 in the previous session markets are now pricing in an 868 chance of a quarterofapercentagepoint rate hike on july 26 which would lift the fed funds rate target to between 52555 according to the cme fedwatch tool they see a 268 chance of another move of that size in september up from 164 a day ago just two trading days remain in whats been a robust first half for us stocks the sp 500 has risen 144 this year while the dow industrials is up 28 and the techheavy nasdaq composite has jumped by 30 year to date according to factset data after a very strong rally in markets so far this year the market is currently in a holding pattern as jitters about the feds next move are still prevalent schleif of bmo family office said the market is processing the recent strength in the economic data in both positive and negative ways as solid economic data means that the economy is more resilient but it also emboldens the federal reserve to keep raising interest rates this conundrum makes it more difficult for the stock market to break out of the upward trending trading range it has been in for the past few months she added see the nasdaq100 is headed for its best first half on record but obstacles to further gains lie ahead this content was created by marketwatch which is operated by dow jones  co marketwatch is published independently from dow jones newswires and the wall street journal