Stocks End Higher as Heavy Week of Data Continues…..
U.S. equities closed higher as the markets continued to parse through a deluge of data and reflect on yesterday’s unchanged Fed monetary policy decision. On an otherwise quiet day from a headline perspective, the markets turned much of their attention to early economic data, most notably the preliminary look at Q2 GDP which showed growth came in below forecasts yet remained robust. Meanwhile additional economic data came in the form of pending home sales which declined and initial jobless claims that came in north of expectations. On the corporate front, earnings season continued to garner much of the focus as Facebook topped earnings estimates but warned of a significant deceleration in revenue growth, Comcast beat the Street’s expectations, and Ford boosted its guidance. Treasuries dipped after reversing higher yesterday following the Fed’s decision, to modestly push yields higher. The U.S. dollar saw pressure, while gold and crude oil prices gained ground. Asia finished broadly higher amid a choppy week, while Europe also rebounded for a second straight session.
The Dow Jones Industrial Average advanced 154 points (0.4%) to 35,085 and the S&P 500 Index rose 19 points (0.4%) to 4,419, and the Nasdaq Composite increased 16 points (0.1%) to 14,778. In moderate volume, 817 million shares were traded on the NYSE and 3.8 billion shares changed hands on the Nasdaq. WTI crude oil rose $1.23 to $73.62 per barrel. Elsewhere, the gold spot price increased $31.50 to $1,831.20 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—dipped 0.5% to 91.88.
Q2 GDP misses forecasts, jobless claims come in above estimates…..
The first look (of three) at Q2 Gross Domestic Product, the broadest measure of economic output, showed a quarter-over-quarter (q/q) annualized rate of expansion of 6.5%, versus the Bloomberg consensus estimate of a 8.4% gain after the downwardly-revised 6.3% increase in Q1. Personal consumption rose by 11.8%, compared to forecasts of a 10.5% gain, and following the unadjusted 11.4% increase recorded in Q1. The Bureau of Economic Analysis said the increase in real GDP came as the sharp rise in personal consumption was met with gains for nonresidential fixed investment, exports, and state and local government spending that were partly offset by decreases in private inventory investment, residential fixed investment, and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.
On inflation, the GDP Price Index came in at a 6.0% increase, above expectations of a 5.4% gain, and versus the unrevised 4.3% rise seen in Q1, while the core PCE Index, which excludes food and energy, moved 6.1% higher, matching expectations, and following the upwardly-adjusted 2.7% gain in Q1.
Weekly initial jobless claims came in at a level of 400,000 for the week ended July 24, versus forecasts calling for 385,000 and compared to the prior week’s upwardly-revised 424,000 level. The four-week moving average rose by 8,000 to 394,500, and continuing claims for the week ended July 17 increased by 7,000 to 3,269,000, north of estimates of 3,183,000. The four-week moving average of continuing claims decreased by 53,750 to 3,290,750.
Pending home sales fell by 1.9% month-over-month (m/m) in June, versus estimates calling for a flat reading, after May’s upwardly-revised 8.3% gain. Sales were 3.3% lower y/y, on the heels of May’s upwardly-revised 14.2% rise. Pending home sales reflect contract signings and are a gauge of the pipeline of existing home sales.
Treasuries were mostly lower following yesterday’s upside reversal in the wake of the Federal Reserve’s monetary policy decision.
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