US Q1 GDP at 1.3%, Dow Jones Dives on Soft Salesforce Revenue
Once again, stock markets are experiencing a bad hair day, with S&P marginally lower, while Dow Jones is diving lower, as risk sentiment remains negative. The US Dollar has also reversed lower on disappointing pending home sales for April, which show that high FED rates are hurting sales. The Q1 GDP was revised lower, but came a tick higher than expectations, however, the disappointing Q1 revenue of Salesforce had a bigger impact.
The Dow Jones index is down for the sixth day in a row, with a significant portion of the selling pressure focused on Salesforce. The company, which is a component of the Dow Jones Industrial Average, saw its stock plummet by 18% following a disappointing outlook, which alone shaved around 200 points off Dow Jones (DJIA).
Dow Jones Chart Daily – Dow for the 6th Day
However, the S&P 500 futures are performing relatively better, down only 0.3% or 16 points before the market opens. This resilience can be partly attributed to lower Treasury yields, which have seen a reversal, with the US 10 year notes falling by around 8 points after surging over the past two days.
On a more positive note, several retailers reported better-than-expected earnings, including Dollar General, Best Buy, Foot Locker, and American Eagle Outfitters. This indicates that consumer spending remains robust, even though none of these companies revised their guidance upwards. The better-than-expected earnings from these retailers suggest that, despite economic uncertainties, consumers are continuing to spend, providing some support to the market.
The Second Look at US Q1 2024 GDP
- The second reading of the US Q1 GDP shows an annualized growth rate of +1.3%, in line with expectations but a slight downgrade from the advance Q1 reading of +1.6%.
- This marks a significant slowdown from the final Q4 reading of +3.2% and the robust +5.2% growth in Q3.
Detailed Breakdown:
- Consumer Spending: +2.0%, lower than the +2.5% advance estimate.
- Consumer Spending on Durables: Revised up to +1.1% from -2.1% advance.
- GDP Final Sales: +1.7%, down from +2.0% advance.
- GDP Deflator: +3.1%, unchanged from the advance estimate.
- Core PCE (Personal Consumption Expenditures): +3.6%, slightly down from +3.7% advance.
- Business Investment: Revised to +1.0% from +3.2% advance.
- Corporate Profits: -1.7%, a significant drop compared to +3.9% in Q1.
- PCE Services Inflation (excluding energy and housing): 4.9%, slightly down from 5.1% advance.
Dow Jones Index Live Chart
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