GDP in Focus

Q4 GDP Lags, Markets Open Higher

Posted Thursday, March 28, 2019 by
Shain Vernier • 2 min read

Continuing the recent pattern of strong Wall Street opens, the U.S. indices have kicked off trade in the green. The early bullish price action is a bit of a surprise following today’s negative U.S. Q4 GDP report. At least for the early going, the DJIA, S&P 500 and NASDAQ appear content to ignore the data altogether.

Q4 GDP Disappoints Expectations

Earlier, the much-anticipated U.S. Q4 GDP report was released to the public. The numbers left much room for improvement and certainly didn’t impress analysts. Here is a look at the hard data:

Event                                                                          Actual          Projected      Previous

GDP Annualized (Q4)                                                  2.2%                2.4%                2.6%

GDP Price Index (Q4)                                                  1.9%                 1.8%               2.0%

Continuing Jobless Claims (March 11)                   1.756M            1.750M           1.743M

Initial Jobless Claims (March 18)                               211K                  225K              216K

Perhaps the most important aspect of today’s Q4 GDP report is that figures fell from those of the previous release. The forthcoming 2019 Q1 GDP statistics are estimated to drop even further due to the prolonged U.S. government shutdown. If these expectations prove true, then that will be two quarters in a row that output has slid. While U.S. growth remains positive, the lagging GDP indicator will go a long way in backing up talk of pending recession.

U.S. Indices Ignore Today’s GDP Numbers

Whipsaw action has been the rule in the U.S. indices this week. The June E-mini S&P 500 is no exception, currently in heavy rotation above daily downside support.

June E-mini S&P 500 Futures (ES), Daily Chart
June E-mini S&P 500 Futures (ES), Daily Chart

Here are the levels to watch for the remainder of the day:

  • Support(1): Bollinger MP, 2799.00
  • Support(2): Daily SMA, 2794.25

Overview: For a second straight session, the June E-mini S&Ps have tested and rejected daily downside support. If the 2794.00-2799.00 area gives way, this market is likely headed much lower.

However, the intermediate-term bullish trend in U.S. equities remains intact. Today’s Q4 GDP report hasn’t shaken investor faith in stocks ― at least not yet.

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