Live Markets: Chew on that, Powell: GDP, durable goods, jobless claims

Edwards Lifesciences

25/07/2024 16:58

* 
      Major U.S. stock indexes green, Dow up 0.8%, Nasdaq up
just 0.1%
    

        * 
      Industrials lead sector gainers; Comm svcs biggest loser
    

        * 
      Euro STOXX 600 index falls ~0.7%
    

        * 
      Dollar edges down; gold down >1%; bitcoin off ~2%; oil up
    

        * 
      U.S. 10-Year Treasury yield falls to ~4.23%
    

  
Welcome to the home for real-time coverage of markets brought to
you by Reuters reporters. You can share your thoughts with us at
    
    
    CHEW ON THAT, POWELL: GDP, DURABLE GOODS, JOBLESS CLAIMS
    Market participants were treated to a triple play of
economic data, which combined to show the U.S. economy is
robust, and consumers and corporations alike continue to spend.
    That's good news, as it strengthens the narrative that the
United States will avoid recession even if it turns out the Fed
waited too long to start easing its restrictive policy rate.    
   
    The Commerce Department took its first swing at
second-quarter GDP  USGDPA=ECI , which showed the U.S. economy
grew by 2.8% on a quarterly annualized basis.
    That is exactly double the first-quarter pace and 80 basis
points faster than analysts expected.
    On a line-item basis, an 11.6% jump in equipment investment
was an eye-catcher. The 4.5% increase in intellectual
property/software - which would include AI investment - was also
a head-turner. 
    "The trajectory remains robust for capital spending related
to artificial intelligence. We see this as an ongoing
opportunity for investors," says Jeffrey Roach, chief economist
at LPL Financial. 
    "Growth rebounded from the weak numbers in Q1 but today's
release does not change expectations that the Fed will cut rates
at least two times this year as inflation decelerates."
    Consumer spending, the tent pole of the U.S. economy,
responsible for about 70% of the total, also accelerated,
growing by 2.5% and contributing 1.6 percentage points to the
top line.
    "Consumer spending remains robust, supported by the
remarkable resilience of the US labour market, which has
continued to add jobs at a decent pace, and the normalisation in
rates of inflation, which are gradually closing in on the
Federal Reserve’s 2% target," Matthew Ryan, head of market
strategy at Ebury.
    This graphic shows consumers ramped up their spending on
durable and non-durable goods.
    Speaking of the devil, new orders for long-lasting,
U.S.-made goods  USDGN=ECI  unexpectedly plunged by 6.6% last
month in a rude defiance of the 0.3% growth expected by
consensus.
    Drilling down into the tireless Commerce Department's report
- which includes items ranging from waffle irons to attack
drones - a whopping 127.2% plunge in commercial aircraft/parts
helped sink the headline, while a 6.1% increase in defense
capital goods somewhat mitigated matters.
    Excluding defense, new orders plunged an even 7.0%. And
excluding transportation, they actually rose 0.5%.
    On the bright side, there was a 1.0% increase in so-called
core capital goods, which excludes aircraft and defense and is
considered a barometer of U.S. corporate spending intentions. 
    That's a nice reversal from May's 0.9% drop and much more
robust than the paltry 0.2% gain economists projected.
    "Volatile transportation orders were to blame for the poor
headline figure," writes Bernard Yaros, U.S. lead economist at
Oxford Economics. 
    "Core orders, which are a better gauge of future capital
spending by companies, performed better than even our
above-consensus forecast, reinforcing our sanguine outlook for
equipment spending in H2 2024.
    And finally, the number of U.S. workers to queue up for
jobless benefits  USJOB=ECI  dipped by 4.1% last week to
235,000, per the Labor Department.
    But the overall trend, as expressed by the 4-week moving
average of initial jobless claims, is sideways.
    Citing variables including the effects of Hurricane Beryl,
auto plant retooling, among other things, Oliver Allen, senior
U.S. economist at Pantheon Macroeconomics had this to say:
    "Looking through the fog, we suspect that the underlying
uptrend in claims that became clear a few months ago is ongoing,
given that high rates and slowing consumer demand seem to be
prompting a bigger number of layoffs."
    Ongoing claims  USJOBN=ECI , reported on a one-week lag,
inched 0.5% lower to 1.851 million, though still well north of
the 1.7 million pre-pandemic "normal." 
   
    (Stephen Culp)
    *****
    
    
    FOR THURSDAY'S EARLIER LIVE MARKETS POSTS:
    
    NASDAQ DOWN, S&P 500 DIPS, DOW GAINS IN EARLY TRADE - CLICK
HERE
    
    S&P 500 INDEX: AFTER SHARP SLIDE, SEEKING TO STABILIZE -
CLICK HERE
    
    WHAT'S UP WITH THE YEN? - CLICK HERE
    
    WHY UBS LIKES BANKS - CLICK HERE 
    
    STOXX 600 DROPS TO 12-WEEK LOW AS EARNINGS FAIL TO IMPRESS -
CLICK HERE
    
    GLOBAL EQUITY SLUMP SET TO GATHER MOMENTUM IN EUROPE - CLICK
HERE
    
    STOCK ROUT SPREADS BEYOND TECH - CLICK HERE
        
  
 
    

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Nasdaq, S&P 500 down again    https://tmsnrt.rs/3LGooE0
GDP contributors    https://reut.rs/4de8VXE
GDP consumer contribution    https://reut.rs/3SlZBZI
Durable goods    https://reut.rs/4fhrAUk
Core capital goods    https://reut.rs/4d7yAkO
Jobless claims    https://reut.rs/4fgxk0x
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>