Dow fell 49, advancers & decliners were about even & NAZ lost 11. The MLP index was off 1+ to the 256s & the REIT index added 4 to 326. Junk bond funds were mixed
& Treasury yields declined. Oil slid down to 68 & gold went up 5 to 1223.
AMJ (Alerian MLP Index tracking fund)
CL=F
GC=F
Most US stocks rose, led by gains in companies including Amazon (AMZN) & Microsoft (MSFT & Dow stock) after their earnings reports exceeded expectations. Disappointing growth in Europe weighed on the £ & €. The NAZ 100 Index rallied for a 3rd day, with AMZN shares climbing to a record after the online juggernaut posted its biggest expansion in profit margins in about 2 years. Yields on benchmark Treasuries fell & the $ fluctuated near recent highs as the American economy cooled less-than-expected in Q1. The UK posted the worst quarterly GDP figures since 2012 & lackluster numbers also came out of France & Spain. The slew of Q1 growth figures are the latest clues on the health of the global economy, which is preoccupying investors amid growing signs of a peak in the cycle & against a backdrop of rising rates. The murky outlook is threatening to outweigh the impact of both a solid earnings season & easing geopolitical tension.
US economic growth cooled last qtr as consumers pulled back following outsize spending in the prior period, though solid business investment cushioned some of the weakness & employee-compensation costs accelerated amid a tight job market. GDP rose at a 2.3% annualized rate after climbing 2.9%, the Commerce Dept reported. The forecast called for a 2% gain. While GDP growth was the best for any Q1 period since 2015, it's a step down from 3 qtrs of GDP growth above or near 3 %, & a reminder that Q1 remains plagued by data quirks. Analysts expect a rebound as tax cuts take hold amid a strong job market, though tailwinds such as low inflation & borrowing costs are starting to dissipate, & trade tensions represent a headwind. The 2.3% pace of GDP growth is still faster than what the Federal Reserve sees as the economy's long-term potential rate & officials have previously said they view the Q1 slowdown as transitory, with the economy poised to reach a milestone in May, the 2nd-longest expansion on record. Investors expect the central bank to raise interest rates in Jun for the 2nd time this year. Even so, the results underline the difficulty of achieving Pres Trump's goal of 3% sustained growth, despite corp & individual tax cuts that went into effect in Jan. Other figures today cast a shadow over the strong, synchronized global upswing: Europe's economy lost momentum in Q1 as expansions slowed from the UK to France, partly because winter storms ripped thru the region. Consumer spending, the biggest part of the economy, rose 1.1%, matching estimates & marking the smallest gain since 2013. Business-equipment spending & residential investment also cooled, with the gov citing a downturn in brokers' commissions on home sales. Spending on nonresidential structures & intellectual property accelerated in the period, limiting any broader slowdown. Gov spending slowed to a 1.2% gain from 3%, as both federal & state & local outlays cooled. Trade added 0.2 percentage point to growth, while inventories added 0.43 point, a reversal from the prior quarter, when they subtracted a combined 1.69 points. Trade & inventories are 2 of the most volatile components in GDP calculations. The report also showed price pressures are picking up. The GDP price index rose 2% in Q1. A measure of inflation, tied to consumer spending &excluding volatile food & energy costs, advanced at a 2.5% annualized pace, the fastest since 2011, adding to signs that price gains are picking up.
U.S. Growth Cools to 2.3%
club.ino.com/trend/analysis/stock/CVX?a_aid=CD3289&a_bid=6ae5b6f7
Strong earnings by tech giants were not enough to bring out stock buyers. AMZN stock is flying high but earnings from energy giant Exxon Mobil (XOM, another Dow stock & Dividend Aristocrat), among others, was a drag. Overall earnings got less than rave reviews while trade negotiations drone on with little accomplished. The GDP data, no great surprise, was not helpful. Dow remains not far from 24K as rally days of the past seem like a distant memory.
Dow Jones Industrials
& Treasury yields declined. Oil slid down to 68 & gold went up 5 to 1223.
AMJ (Alerian MLP Index tracking fund)
CL=F
| Crude Oil | 67.90 | -0.29 | -0.43% |
GC=F
| Gold | 1,321.50 | +3.60 | +0.27% |
Most US stocks rose, led by gains in companies including Amazon (AMZN) & Microsoft (MSFT & Dow stock) after their earnings reports exceeded expectations. Disappointing growth in Europe weighed on the £ & €. The NAZ 100 Index rallied for a 3rd day, with AMZN shares climbing to a record after the online juggernaut posted its biggest expansion in profit margins in about 2 years. Yields on benchmark Treasuries fell & the $ fluctuated near recent highs as the American economy cooled less-than-expected in Q1. The UK posted the worst quarterly GDP figures since 2012 & lackluster numbers also came out of France & Spain. The slew of Q1 growth figures are the latest clues on the health of the global economy, which is preoccupying investors amid growing signs of a peak in the cycle & against a backdrop of rising rates. The murky outlook is threatening to outweigh the impact of both a solid earnings season & easing geopolitical tension.
Tech Leads Stock Gains; Pound Weakens on Growth: Markets Wrap
US economic growth cooled last qtr as consumers pulled back following outsize spending in the prior period, though solid business investment cushioned some of the weakness & employee-compensation costs accelerated amid a tight job market. GDP rose at a 2.3% annualized rate after climbing 2.9%, the Commerce Dept reported. The forecast called for a 2% gain. While GDP growth was the best for any Q1 period since 2015, it's a step down from 3 qtrs of GDP growth above or near 3 %, & a reminder that Q1 remains plagued by data quirks. Analysts expect a rebound as tax cuts take hold amid a strong job market, though tailwinds such as low inflation & borrowing costs are starting to dissipate, & trade tensions represent a headwind. The 2.3% pace of GDP growth is still faster than what the Federal Reserve sees as the economy's long-term potential rate & officials have previously said they view the Q1 slowdown as transitory, with the economy poised to reach a milestone in May, the 2nd-longest expansion on record. Investors expect the central bank to raise interest rates in Jun for the 2nd time this year. Even so, the results underline the difficulty of achieving Pres Trump's goal of 3% sustained growth, despite corp & individual tax cuts that went into effect in Jan. Other figures today cast a shadow over the strong, synchronized global upswing: Europe's economy lost momentum in Q1 as expansions slowed from the UK to France, partly because winter storms ripped thru the region. Consumer spending, the biggest part of the economy, rose 1.1%, matching estimates & marking the smallest gain since 2013. Business-equipment spending & residential investment also cooled, with the gov citing a downturn in brokers' commissions on home sales. Spending on nonresidential structures & intellectual property accelerated in the period, limiting any broader slowdown. Gov spending slowed to a 1.2% gain from 3%, as both federal & state & local outlays cooled. Trade added 0.2 percentage point to growth, while inventories added 0.43 point, a reversal from the prior quarter, when they subtracted a combined 1.69 points. Trade & inventories are 2 of the most volatile components in GDP calculations. The report also showed price pressures are picking up. The GDP price index rose 2% in Q1. A measure of inflation, tied to consumer spending &excluding volatile food & energy costs, advanced at a 2.5% annualized pace, the fastest since 2011, adding to signs that price gains are picking up.
U.S. Growth Cools to 2.3%
Chevron (CVX, a Dow stock & Dividend Aristocrat) reported Q1 earnings of $3.64B. EPS was $1.90 surpassing expectations. However CVX does not adjust
its reported results based on one-time events such as asset sales. The estimate was for EPS of $1.45. The oil
company posted revenue of $37.76B in the period, falling short of the forecast for $38.74B. The stock rose 1.53.
If you would like to learn more about CVX, click on this link:club.ino.com/trend/analysis/stock/CVX?a_aid=CD3289&a_bid=6ae5b6f7
Chevron: 1Q Earnings Snapshot
Strong earnings by tech giants were not enough to bring out stock buyers. AMZN stock is flying high but earnings from energy giant Exxon Mobil (XOM, another Dow stock & Dividend Aristocrat), among others, was a drag. Overall earnings got less than rave reviews while trade negotiations drone on with little accomplished. The GDP data, no great surprise, was not helpful. Dow remains not far from 24K as rally days of the past seem like a distant memory.
Dow Jones Industrials
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