Thursday data: GDP (and other stuff)
All three major U.S. stock indexes green
Cons disc up most among S&P sectors; real estate, cons staples laggards
STOXX 600 up 0.7%
Dollar, gold higher; bitcoin and crude both up >2%
U.S. 10-year Treasury yields edges up to ~3.88%
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THURSDAY DATA: GDP (AND OTHER STUFF)
Thursday's upward GDP revision helped investors swallow some not-so-good data.
The Commerce Department took its second swipe at second-quarter GDP USGDPP=ECI, improving it to an even 3.0% growth at a quarterly annualized rate.
Consensus called for a repeat of the 2.8% advance reading released last month.
Below the headline, some eye-catchers include the 10.8% surge in private investment in equipment, while the 2.0% drop in residential structures speaks to the headwinds faced by the housing market.
Trade was a liability, with net imports detracting 0.7% from the topline.
"Although the unexpectedly strong Q2 GDP gain is backward looking and doesn’t reflect what’s happening in real time in the economy, it still provides support for the soft-landing/no-landing case," writes Jim Baird, chief investment officer at Plante Moran Financial Advisors, who added "There’s nothing of note in the GDP report that should deter the Fed from their rate-cutting path."
The consumer, who shoulders about 70% of the U.S. economy, was the star of the show; spending growth was revised 60 basis points higher to 2.9%.
Consumer spending contributed two percentage points to the headline, with outlays on durable goods responsible for one-fifth of that.
"Solid growth of consumer spending propelled the economy forward in the second quarter," says Bill Adams, chief economist at Comerica Bank. "And the increase of consumer confidence in July suggests it will propel growth in the second half of the year as well."
Next, 231,000 U.S. workers joined the unemployment queue last week USJOB=ECI, 2,000 fewer than the week prior and just a hair below the 232,000 analysts expected.
While initial claims essentially moved sideways, the overall trend, as expressed by the four-week moving average, is lower.
However, ongoing claims USJOBN=ECI, reported on a one-week lag, grew by 0.7% to 1.868 million, inline with economist forecasts.
This suggests that recent pink slip recipients are having a tougher time finding suitable replacement gigs.
"The latest claims data provide further evidence that the labor market is slowing only gradually," writes Ian Shepherson, chief economist at Pantheon Macroeconomics. "Payroll growth will remain on a slowing trend, as hiring buckles under the pressure of very high real interest rates, tight credit conditions, and slowing growth in consumers’ real expenditure."
Pivoting to the housing market, signed contracts for the sales of existing homes USNAR=ECI unexpectedly dropped by 5.5% last month, according to the National Association of Realtors (NAR).
The drop defied the modest 0.4% increase analysts expected.
High mortgage rates have kept many would-be buyers and sellers on the housing market's sidelines, and promises of rate cuts have many biding their time.
"The positive impact of job growth and higher inventory could not overcome affordability challenges and some degree of wait-and-see related to the upcoming U.S. presidential election," writes Lawrence Yun, NAR's chief economist.
The Commerce Department's advance take on July goods trade balance USGBAL=ECI and wholesale inventories USAWIN=ECI showed the difference between the value of goods imported to the United States and exported from it widened by 6.3% to -$102.66 billion, while the value of merchandise stacked in wholesaler warehouses increased by 0.3%.
(Stephen Culp)
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THURSDAY'S OTHER LIVE MARKETS POSTS:
UPBEAT GDP REVISION REMEDIES NVIDIA HANGOVER CLICK HERE
BRITISH BANKS CAUGHT IN BUDGET CROSSHAIRS CLICK HERE
MIXED PICTURE: NVIDIA DOWN, EUROPEAN TECH UP CLICK HERE
BURBERRY TO CHECK OUT OF FTSE 100 NEXT WEEK CLICK HERE
STOXX 600 RISES TO 6-1/2 WEEK HIGH CLICK HERE
EUROPEAN FUTURES STEADY AFTER NVIDIA RESULTS CLICK HERE
NVIDIA WATCH PARTY OVER, BACK TO INFLATION VIGILCLICK HERE
GDP contributors https://reut.rs/4dGTQ1u
GDP consumer contribution https://reut.rs/4cQI6Ih
Continuing claims and JOLTS new hires https://reut.rs/3WXBQJ2
Pending home sales https://reut.rs/3X3hEpi
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