On Thursday, US equities rallied for the second consecutive day, with all three major indexes rising more than 1% after data showed that the US economy had contracted for the second quarter in a row.

This fueled investor speculation about the US Federal Reserve not having to be as aggressive in terms of interest rate hikes, as had been feared.

The data impact

After the data, there was a decline in the yields for the 10-year US Treasury notes, while real estate and utilities turned out to be the best performers of all the S&P 500 sectors.

These sectors are known to rise when there is a yield decline. Market analysts said that this decline shows markets believing that the Fed may have to change its stance in the next 12-month period.

They said that this impact implies that there will be a slowdown in the aggressiveness moving forward, even if there are no rate cuts right away.

Moreover, this week saw the growth forecast for earnings in the second quarter rise, with more S&P 500 companies reporting results and surpassing analyst expectations.

There was a 6.1% rise in the shares of Ford Motor Co after its net income for the quarter turned out to be better than expected.

Index performance

There was a more than 12% increase in the shares of Amazon.com Inc. after the closing bell, as the quarterly sales of the online retailer surpassed expectations.

As for the regular session, the company saw a rise of 1.1%. After hours trading also saw a 3% rise in the shares of Apple Inc. after the upbeat forecast and quarterly report of the company.

Meanwhile, there was also a 2% rise in the S&P 500 e-mini futures. There was a 1.03% rise in the Dow Jones Industrial Average, which saw it go up by 332.04 points to reach 32,529.63.

A 1.21% gain in the S&P 500 saw it climb by 48.82 points to reach 4,072.43, while a 1.08% rise in the Nasdaq Composite saw it go up by 130.17 points to reach 12,162.59.

The Nasdaq recorded its biggest percentage gain in two days since May 27th. There had also been a rally in stocks in the last session when the Fed hiked interest rates.

Economic data

Earlier in the day, the Commerce Department reported that there had been a contraction in the US economy for the second straight quarter.

There had been a decline in the gross domestic product (GDP) in the previous quarter as well. The news fueled worries that the economy is on the brink of recession.

According to some investors, it could also deter the US Fed from being so aggressive when it comes to raising interest rates once more.

Indeed, the comments from Fed chairman Jerome Powell did indicate that the central bank may slow down its pace of rate hikes.

According to analysts, more investors are now entering the markets, as they think that all the big surprises have already happened in terms of interest rates.