Stocks closed in the red for the fifth straight trading session.
First, the scoreboard:
- Dow: 15,821.4 (–68.3, -0.4%)
- S&P 500: 1,785.0 (-7.7, -0.4%)
- Nasdaq: 4,033.1 (-4.8, -0.1%)
And now the top stories:
- A round of surprisingly strong economic data ironically may have been the cause of today’s sell-off. “The key risks to markets are US growth being too strong (leading to earlier-than- expected tapering), China growth surprising on the downside, too much corporate spending (bad for margins and depreciation charges) and a European political event,” said Credit Suisse’s Andrew Garthwaite earlier this week.
- Weekly initial jobless claims fell to 298,000. This is down from last week’s 321,000, which was revised up from an earlier reading of 316,000. The 4-week moving average fell to 322,250 from 330,000 a week ago. “While we continue to note that the tone in the initial claims data has been steadily improving over the past few months, we believe that seasonal volatility has recently led the data to overstate the true voracity of labour market improvement,” said TD Securities Gennadity Goldberg.
- Q3 GDP growth was revised up to +3.6% from the BEA’s preliminary estimate of 2.8%. This was also well ahead of the 3.1% expected by economists. “However, the big story was the upward revision in inventories,” noted BI’s Matthew Boesler. “Inventories increased $US116.5 billion according to the second estimate, contributing 1.7 percentage points to the headline number, up from an initial estimate of $US86 billion, which had contributed 0.8 percentage points to the initial 2.8% GDP growth estimate.”
- Here’s Barclays’ Peter Newland on the GDP report: “Indeed, a reversal of some of the stock building is likely in Q4, although we expect domestic demand growth, particularly consumption, to be somewhat stronger as the impact of fiscal tightening fades. On this front, the backdrop for the household sector looks rosier following this report, with real disposable income growth revised up to 2.9% from 2.5% in Q3, and to 4.1% from 3.5% in Q2. This was also reflected in the savings rate, which was revised three-tenths higher in Q3, to 5.0%. ”
- Bitcoin got tons of attention today. Early Thursday morning, the People’s Bank of China announced restrictions barring the country’s banks from handling the digital currency. Bitcoin crashed 30% from $US1,240 to $US870 in the wake of that news. “This is worse than the tulip mania,” said Nout Wellink, former president of the Dutch Central Bank. “At least then you got a tulip [at the end], now you get nothing.”
- Also this morning, Bank of America Merrill Lynch became the first major Wall Street firm to offer coverage on Bitcoin. “We believe Bitcoin can become a major means of payment for e-commerce and may emerge as a serious competitor to traditional money transfer providers,” wrote currency strategist David Woo in a 14-page note to clients. “As a medium of exchange, Bitcoin has clear potential for growth, in our view.” Woo estimates that Bitcoin has a fair value of $US1,300.
- Don’t Miss: GOLDMAN: Here Are Our Top 6 Trades For 2014 »
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