12.20pm: US stocks lower at mid-session
US stocks were seeing red at lunch on Thursday as disappointing US GDP figures for the first quarter put a dampener on sentiment.
The Dow Jones Industrial Average lost around 12 points at 33,807. The S&P 500 is down about half a point at 4,182. The tech heavy Nasdaq lost over 80 points at 13,970.
Gross domestic product, seen as a key indicator for the US economy, rose at a 6.4% annual pace in the first three months of the 2021. Estimates had been for between 6.5% and 6.8%.
“The US economic bounceback remains on track despite a marginally lower GDP reading for the first quarter. Today’s annualised GDP reading of 6.4% fell short of estimates today, and markets evidently struggled with that fact,” said analyst Joshua Mahony at IG.
“Declines throughout US markets at the open come despite a post-earnings surge from tech giant Facebook. Nonetheless, with real GDP rising to an annualised figure of $19.1 trillion, it is highly likely that we overcome the pre-pandemic peak of $19.3 trillion by the end of Q2,” he added.
Earlier, the UK’s top share index finished down around two points, or 0.03%, at 6,961.
9.45am: Proactive North America headlines:
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Gold Resource Corporation (NYSEAMERICAN:GORO) (FRA:GIH) posts first quarter net income of $2.5M and says gold production in-line with quarterly guidance
9.40am: Wall Street ahead
The main indices on Wall Street made a strong start to Thursday’s session as strong earnings from Apple and Facebook overnight combined with positive economic data to push stocks higher.
In the early minutes of trading, the Dow Jones Industrial Average was up 0.57% at 34,014, while the S&P 500 climbed 0.79% to 4,216 and the Nasdaq rose 0.92% to 14,180.
Market sentiment was lifted ahead of the opening bell by US GDP data for the first quarter of 2021, which showed the American economy grew by an annualised 6.4% compared to estimates of between 6.5% and 6.8%. While falling short of forecasts, this was still a big increase on the 4.3% growth in the final three months of 2020, and shows the country’s economy benefiting from the government’s stimulus programme and vaccination roll-out.
Meanwhile, optimism may also have been boosted by jobless claims figures for last week, which showed a drop in the number of American workers filing for unemployment benefits to 553,000 from 566,000 the week before, although it was above estimates of 540,000.
7:45am: Wall Street to open in the green
Apple reported record second-quarter revenues of $89.58bn compared to expectations of around $77bn and a rise of more than 50%, with net income of $23.6bn.
Meanwhile, Facebook’s first-quarter revenue rose 48% to $26.2bn, around $3bn more than forecast, while net income rose 94% to $9.5bn.
In pre-market trading, Apple is up 2.7% while Facebook has jumped 7%.
So the Dow Jones Industrial Average is expected to open up 177 points or 0.48% while the S&P 500 is heading for another record, up 0.71%. The tech-focused Nasdaq Composite is of course outperforming both, set to open more than 1% higher to another peak.
Sophie Griffiths at Oanda said: “US futures are pointing to a stronger start, with the tech-heavy Nasdaq set to outperform. Blowout results from Apple and Facebook after the close yesterday mean that both stocks are in line for a sharp gap higher on the open.”
If investors can tear themselves away from tech, there is the small matter of the latest US economic growth figures. First-quarter GDP is expected to grow at an annualised rate of 6.5% to 6.8% compared to 4.3% in the final three months of last year.
There are also the weekly jobless claims, out at the same time, which are forecast to be steady at 545,000.
Michael Hewson at CMC Markets said: “If recent data is any guide [the GDP figure] should be a very solid number, though this first iteration may not be as good as markets might look at pricing in. This is because a lot of the March data may well not be up to date. This may mean it is susceptible to upward revisions in the coming weeks.
“Irrespective of whether the number is at the lower or upper end of expectations the US economy looks set to start 2021 very much on the front foot.”
Four things to watch for on Thursday:
- Firms in the earnings diary today include payments group MasterCard Inc (NYSE:MA), telecoms conglomerate Comcast Corp (NASDAQ:CMCSA) and pharma firm Merck & Co Inc (NYSE:MRK)
- Fast-food giant McDonald’s Corp (NYSE:MCD) will be of interest after it reported sales in its first quarter that surpassed pre-pandemic levels
- Also in focus will be the owner of the William Morris talent agency Endeavor Group, which is due to go public on Thursday after pricing its initial public offering (IPO) shares at US$24 each, the top end of its projected price range
- On the macro front, aside from GDP and jobless figures, investors may cast an eye over US pending home sales data as well as a number of speeches from various Fed representatives
Story by ProactiveInvestors
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