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US markets wrapped up April on a sour note. The Dow fell back into negative territory for the year, the dollar ended a nine-month streak of gains, and gold tanked.
First, the scoreboard:
- Dow: 17,786.30, -249.23, (-1.38%)
- S&P 500: 2,078.06, -28.79, (-1.37%)
- Nasdaq: 4,922.82, -100.82, (-2.01%)
And now, the top stories on Thursday:
- Initial jobless claims fell to 262,000 from 296,000, much lower than the 290,000 expected by economists, and it represented a 15-year low. “The ongoing improvement in continuing claims is particularly encouraging and is consistent with recent declines in the unemployment rate, suggesting that unemployed workers continue to find gainful employment,” TD Securities’ Cheng Chen said.
- The employment cost index, or ECI, climbed by 0.7% in Q1, a pace that was a bit stronger than the 0.6% rate expected by economists. This represents a 2.6% gain from a year ago, a big jump from the 2.2% gain last quarter. And these two data points on the labour market show we might be at full employment: “While the market was expecting a firm print in q/q terms, the rate of acceleration in y/y terms is likely to be taken as a sign that the economy is beyond full employment,” BNP Paribas economist Bricklin Dwyer said.
- The Atlanta Fed nailed the horrendous Q1 US gross domestic product print, and they have bad news about Q2. Their latest forecast indicates that the US economy will grow by 0.9% in the second quarter. For a sense of how gloomy that projection is, Bank of America Merrill Lynch is forecasting 3.5% growth and Goldman Sachs is forecasting 3.0% growth.
- Yelp shares got smoked, falling by more than 23% after a big miss on first-quarter earnings. After the market close on Wednesday, the company announced a loss of 2 cents per share, missing expectations for a 1-cent loss, on revenue that totaled $US118.5 million, short of expectations for revenue of $US119.8 million. The company’s outlook for the year also fell short of estimates.
- Traders are cutting bets that the US dollar’s historic rally will continue. The currency was down for a seventh straight day, the longest such streak in three years, and is on the verge of ending a nine-month streak of gains. According to Bloomberg, the number of net bullish bets — trades counting on the dollar’s ascent — outnumber bearish trades, but that gap fell to a six-month low last week.
- Gold tanked by over 2%, or about $US29 an ounce, to as low as $US1,180.60 an ounce. It slipped below the key $US1,200 level. Silver dropped by as much as 3.8% to around $US15.8 an ounce.
- Shares of Taser International surged by more than 7% after the company reported Q1 earnings and revenues above analysts’ estimates. The company reported sales of $US44.8 million, up 23.7% and better than the estimate of $US39.96 million. The company noted that the increase in revenues was due to higher sales of Tasers, its eponymous product. It also saw increased sales of its Axon body cameras worn by police. Analysts have linked previous spikes to big protests, including the demonstrations in Ferguson, Missouri last year. The company’s shares fell after a documentary questioned the safety of the product.
- Personal income was flat in March but personal spending rose, although less then forecast. According to the Bureau of Economic Analysis, personal income stayed unchanged from the prior month at 0% (vs 0.2% forecast), and spending rose 0.4% (vs 0.5% forecast.) Consumer prices as measured by the personal consumption expenditures, or PCE, rose 0.2% month-over-month as forecast, and 0.3% year-over-year (0.4% forecast.) Stu Hoffman, chief economist at PNC, noted that real after-tax income jumped 6.2%: “Very good news for consumer spending through the rest of 2015 and into 2016.” “Core” PCE, which strips out the more volatile cost of food and energy, rose 0.1% (0.2% expected) in March, and rose 1.3% (1.4% expected) over last year.
- And, the latest Chicago Purchasing Manager’s Index from the Institute of Supply Management came in at 52.3, beating the expectation for 50.0, and ending two months of below-consensus prints. A reading below 50 indicates a contraction.