News Column

Coutts-US close: Stocks dismiss GDP dip to rise higher

May 30, 2014



ENP Newswire - 30 May 2014

Release date- 29052014 - US close: Stocks dismiss GDP dip to rise higher.

Indices gain despite worse-than-expected GDP - Analysts unfazed by weak growth numbers - Q2 expected to bounce back strongly Dow Jones Industrials: 0.40% Nasdaq Composite: 0.54% S&P 500: 0.54% US stocks rose on Thursday as negative economic growth figures were brushed off by expectations of a strongly rebounding second quarter and improved jobs data. The S&P 500 closed at a record high, up 0.54% to 1,920, while the Naddaq rose by the same proportion to 4,248 points and the DJIA climbed 0.4% higher to a 16,699 finish. This was in spite of a US gross domestic product (GDP) contracting by an annualised rate of 1% in the first three months of 2014, according to revised estimates by the Department of Commerce, representing the first quarterly contraction in three years. The figures surprised economists, whose consensus expectation was for the initial estimate of 0.1% growth to be revised lower to -0.5% and follows a 2.6% GDP expansion in the fourth quarter of 2013. The Bureau of Economic Analysis said the sharper-than-expected downwards revision was mainly due to lower private inventory investment than previously estimated, as well as the impact from poor weather. Despite the headline 'miss', the market reaction to the figures was relatively subdued, suggesting that a negative surprise was largely priced in. Daiwa analyst Michael Moran had a positive take on the data, saying that inventory investment had, in his view, been running at 'an unsustainable pace and needed to slow further'.

The revised-down reading is within a more normal range 'and thus the outlook for Q2 and beyond is a bit brighter'. The GDP contraction was also 'quite obviously' due to the severe winter, stressed Paul Ashworth, Chief US economist at Capital Economics, which hit durable goods consumption, residential investment, business investment in non-residential structures and exports. He flagged up that incoming monthly data already was pointing to a 'marked turnaround' in the second quarter.

'For those worried about a recession, it's worth remembering that employment increased by nearly 300,000 in April and jobless claims dropped to 300,000 last week.

Those numbers point to a recovery gathering some real momentum at last.' Another report showed US pending home sales fell 9.4% year-on-year in April following a 7.5% drop a month earlier.

Economists had pencilled in an 8.7% decline. Tyson punches stocks higher - - GDP data surprises to the downside - Analysts unfazed by weak growth numbers Dow Jones Industrials: 0.40% Nasdaq Composite: 0.54% S&P 500: 0.54% US stocks rose on Thursday as negative economic growth figures were brushed off by expectations of a strongly rebounding second quarter and improved jobs data. The S&P 500 closed at a record high, up 0.54% to 1,920, while the Naddaq rose by the same proportion to 4,248 points and the DJIA climbed 0.4% higher to a 16,699 finish. This was in spite of a US gross domestic product (GDP) contracting by an annualised rate of 1% in the first three months of 2014, according to revised estimates by the Department of Commerce, representing the first quarterly contraction in three years. The figures surprised economists, whose consensus expectation was for the initial estimate of 0.1% growth to be revised lower to -0.5% and follows a 2.6% GDP expansion in the fourth quarter of 2013. The Bureau of Economic Analysis said the sharper-than-expected downwards revision was mainly due to lower private inventory investment than previously estimated, as well as the impact from poor weather. Despite the headline 'miss', the market reaction to the figures was relatively subdued, suggesting that a negative surprise was largely priced in. Daiwa analyst Michael Moran had a positive take on the data, saying that inventory investment had, in his view, been running at 'an unsustainable pace and needed to slow further'.

The revised-down reading is within a more normal range 'and thus the outlook for Q2 and beyond is a bit brighter'. The GDP contraction was also 'quite obviously' due to the severe winter, stressed Paul Ashworth, Chief US economist at Capital Economics, which hit durable goods consumption, residential investment, business investment in non-residential structures and exports. He flagged up that incoming monthly data already was pointing to a 'marked turnaround' in the second quarter.

'For those worried about a recession, it's worth remembering that employment increased by nearly 300,000 in April and jobless claims dropped to 300,000 last week.

Those numbers point to a recovery gathering some real momentum at last.' Another report showed US pending home sales fell 9.4% year-on-year in April following a 7.5% drop a month earlier.

Economists had pencilled in an 8.7% decline. Tyson punches stocks higher In company news, Tyson's unsolicited bid for sausage-maker Hillshire Brands saw both stocks fly higher on Thursday.

Meat packager Tyson bid $50 a share in cash for the meat producer, valuing its rival at $6.8bn, GBP5 a share higher than a recent bid for Hillshire from poultry specialist Pilgrim's Pride. Retailer Sears Holding rebounded on a pledge the company would close 80 stores this year, despite wider first-quarter losses and falling revenue.

West Texas Intermediate was up 0.79% at $103.53. S&P 500 - Risers Sears Holdings Corp.

(SHLD) $41.21 +7.77% Tyson Foods Inc.

(TSN) $43.21 +6.04% Biogen Idec Inc.

(BIIB) $319.65 +3.51% First Solar Inc.

(FSLR) $63.39 +3.47% Netflix Inc.

(NFLX) $415.15 +3.47% Pioneer Natural Resources Co.

(PXD) $209.87 +3.40% McKesson Corp.

(MCK) $188.53 +3.18% TripAdvisor Inc.

(TRIP) $98.17 +3.13% Cliffs Natural Resources Inc.

(CLF) $16.56 +3.08% Noble Corporation plc (NE) $31.35 +2.82% S&P 500 - Fallers Simon Property Group Inc.

(SPG) $165.27 -6.06% eBay Inc.

(EBAY) $50.07 -3.28% SLM Corp.

(SLM) $8.56 -2.00% Dollar General Corp (DG) $53.58 -1.87% Mohawk Inds Inc.

(MHK) $135.67 -1.62% Whole Foods Market Inc.

(WFM) $38.10 -1.41% Applied Materials Inc.

(AMAT) $20.26 -1.36% Intuit Inc.

(INTU) $79.14 -1.25% St Jude Medical Inc.

(STJ) $64.96 -1.22% M&T Bank Corp.

(MTB) $120.63 -1.21% Dow Jones I.A - Risers Merck & Co.

Inc.

(MRK) $57.71 +2.32% Unitedhealth Group Inc.

(UNH) $79.29 +0.90% Intel Corp.

(INTC) $26.94 +0.88% E.I.

du Pont de Nemours and Co.

(DD) $68.98 +0.83% Microsoft Corp.

(MSFT) $40.32 +0.77% 3M Co.

(MMM) $142.34 +0.64% Travelers Company Inc.

(TRV) $94.06 +0.64% Caterpillar Inc.

(CAT) $103.57 +0.64% Boeing Co.

(BA) $135.18 +0.63% Wal-Mart Stores Inc.

(WMT) $76.00 +0.62% Dow Jones I.A - Fallers Goldman Sachs Group Inc.

(GS) $160.63 -0.35% Chevron Corp.

(CVX) $122.25 -0.22% Cisco Systems Inc.

(CSCO) $24.66 -0.20% Verizon Communications Inc.

(VZ) $49.69 -0.10% Pfizer Inc.

(PFE) $29.60 -0.03% McDonald's Corp.

(MCD) $101.29 -0.01% Nasdaq 100 - Risers Biogen Idec Inc.

(BIIB) $319.65 +3.51% Netflix Inc.

(NFLX) $415.15 +3.47% TripAdvisor Inc.

(TRIP) $98.17 +3.13% Activision Blizzard Inc.

(ATVI) $20.75 +2.04% Wynn Resorts Ltd.

(WYNN) $219.91 +1.98% Twenty-First Century Fox Inc Class A (FOXA) $35.41 +1.81% Apple Inc.

(AAPL) $635.31 +1.81% Autodesk Inc.

(ADSK) $52.65 +1.80% Mylan Inc.

(MYL) $49.74 +1.79% Priceline Group Inc (PCLN) $1,291.35 +1.68% Nasdaq 100 - Fallers Keurig Green Mountain Inc (GMCR) $112.33 -3.84% eBay Inc.

(EBAY) $50.07 -3.28% Whole Foods Market Inc.

(WFM) $38.10 -1.41% Applied Materials Inc.

(AMAT) $20.26 -1.36% Intuit Inc.

(INTU) $79.14 -1.25% Discovery Communications Inc.

Class A (DISCA) $77.65 -1.08% Vertex Pharmaceuticals Inc.

(VRTX) $72.72 -0.87% PACCAR Inc.

(PCAR) $63.37 -0.77% Google Inc.

(GOOGL) $570.80 -0.71% Celgene Corp.

(CELG) $153.23 -0.69%


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Source: ENP Newswire


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