STOCKS FALL: Here's What You Need To Know

Markets ended the week with very low volatility despite a disappointing GDP report.

First the scoreboard:

Dow: 14,730, +29.3 pts, +0.2%
S&P 500: 1,582, -2.8 pts, -0.1%
NASDAQ: 3,279, -10.7 pts, -0.3%

And now the top stories:

  • The Bureau of Economic Analysis published its first estimate of Q1 real GDP, and the report was mixed.  GDP grew at a 2.5% rate, which was well below the 3.0% growth rate expected by economists.  However, the personal consumption component was strong, growing at a 3.2% rate versus economists’ estimate for a 2.8% rate.
  • “The unexpectedly large drag from defence spending was likely due in part to the first effects of sequestration, but could also be explained by constraints imposed by operating under a continuing resolution, which funded the government through March 27,” said Goldman Sachs’ Jan Hatzius.  Real defence spending contracted at an 11.5% rate in Q1, following a 22.0% rate of contraction in Q4.  This is the “weakest two quarter run for defence spending since the end of the Korean War,” noted JP Morgan’s Michael Feroli.
  • “Year-over-year nominal GDP growth at or below 3.7% has occurred only in recessionary context,” noted the unusually bearish economist Lakshman Achuthan. “Q1 2013 read is 3.4%, the second straight quarter below 3.7%.” Here Are 12 Popular Myths About The US Economy >
  • The University of Michigan’s closely followed estimate of April consumer confidence was revised up to 76.4 from a preliminary reading of 72.3.  This was much better than the 73.5 level economists were looking for.  Still, this was down from the March reading of 78.6.
  • Among the big movers in the stock market was JC Penney.  Yesterday after the closing bell, George Soros disclosed that his fund had accumulated a 7.9% stake in the company.  And during the trading session today, CNBC reported that it had secured new debt financing from Goldman Sachs.  Each piece of news gave the stock a nice boost.
  • Don’t Miss: Sobering Presentation Reveals The Two Economies In America >

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