The stock market the day modestly in the green.
First, the scoreboard:
- Dow: 14,840.9, +16.4, +0.1%
- S&P 500: 1,638.1, +3.2, +0.2%
- NASDAQ: 3,620.3, +26.9, +0.7%
And now, the top stories:
- Oil prices made a weird move at the end of the NYMEX trading session. After spending most of the day up, prices dropped, settling down by a little more than 1% for the day.
- Many analysts have blamed tensions in Syria for the rally in oil prices in recent weeks. But just as many analysts have argued that Syria shouldn’t have a major impact on global supply. “We cannot emphasise too strongly that, whatever option may be adopted we see little or no direct threat to global oil supply emanating from a U.S. strike against the Syrian regime,” said Nomura’s Alistair Newton.
- Initial weekly jobless claims fell to 331,000 from 337,000 a week ago, Economists were looking for 332,000. The 4-week moving climbed to 2,996,250 from 2,986,750, but remain very close to post-crisis lows. “Given the usefulness of jobless claims as a payroll forecasting tool, it should come as little surprise that they are also significantly correlated with wage and salary growth,” said Deutsche Bank’s Carl Riccadonna. “In fact, over the past 25 years, the current level of jobless claims has typically coincided with private wage and salary growth above 6% compared to 3.8% in Q2.”
- Q2 GDP growth was revised up to 2.5% from last month’s initial estimate of 1.7%. Economists were expecting the number to be revised to 2.2%. The revision was largely due to inventories and international trade. “The upward revision to second-quarter US GDP growth… should give Fed officials more confidence that the recovery is gathering steam as the fiscal drag begins to fade,” said Capital Economics’ Paul Ashworth. “Under those circumstances, we still think the Fed will begin tapering its monthly asset purchases in September.”
- The GDP report came with an initial estimate of Q2 corporate profits, which climbed 3.9% quarter-over-quarter. “Many analysts fretted the decline in profits in Q1, because they tend to drive business investment and hiring plans,” said Riccadonna. “We dismissed the Q1 weakness as a temporary development which occurred in lagged response to the growth slowdown in Q4 2012 and Q1 2013. The fact that profits are reaccelerating (+5.0% year-on-year versus +2.1% in Q1) is an encouraging development in this regard.”
- In a new note to clients, Societe Generale’s Albert Edwards telegraphed another one of his famously uber-bearish messages. “The emerging markets ‘story’ has once again been exposed as a pyramid of piffle,” he said. “At the risk of being called a crackpot again, I repeat my forecasts of 450 for the S&P, sub-1% US 10y yields and gold above $US10,000.” Yikes.
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