According to the news report by Bloomberg, the stock market moved lower as the news of the surge in US economic growth was offset by disappointing quarterly earnings results from multiple companies, especially Facebook, Exxon Mobil and Twitter.
After the US government announced that the country’s GDP had grown at an annualized rate of 4.1% in the last three months (the second quarter of the year), the S&P 500 Index slipped on Friday. This is the biggest gain the GDP has made since 2014 and is also close to the median forecast made by Bloomberg’s survey, which revealed a 4.2% increase expectation in the market. President Donald Trump stated that this GDP growth result was “amazing” and that it was also sustainable.
Despite this good news, traders focused on the quarterly results released by numerous companies. Amazon, as usual, did outstandingly well, beating all analyst expectations. However, Facebook, Twitter and Exxon Mobil, among others, fared poorly, with the social media behemoth, Facebook, seeing its worst ever plunge in stocks. Thanks to these mixed results, most equity indices were either trading flat or declined.
According to the Chief Investment Officer of Commonwealth Financial Network, Brad McMillan, market dips are a continued reaction to earnings reports. The main point of what happened to Facebook is not the impact on the company’s stocks, but rather what impact it would have on the market as a whole. This is the second time in a row that the market has seen tech giants falter, which is now causing concern that the future may not be as rosy as first assumed.
Across the pond, the STOXX Europe 600 Index was looking at its best performance in more than two months as telecom and banking firms gained ground. The West Texas Intermediate crude oil benchmark fell, gold gained, the dollar slipped and Treasuries gained.
The growth in GDP data served to highlight the Federal Reserve’s policy direction just at the time when the focus of investors is now returning to central banks. In fact, according to local news reports, the Bank of Japan (BOJ) officials are now assessing methods by which the yield-curve control policy’s side effects can be mitigated.
The European Central Bank stated this week that it plans to stay on course with its plan to terminate bonds purchases and also promised that interest rates would remain unchanged – at least till the summer of 2019.
Overall, stocks across the world performed as follows:
- The S&P 500 dropped 0.2% on Friday morning in New York.
- The Stoxx Europe 600 went up 0.3% to its best performance in nearly 6 weeks.
- The UK’s FTSE 100 went up 0.5%.
- The MSCI Emerging Market Index went up 0.4% to its highest in over 5 weeks.
- The US Dollar dipped 0.2%
- The Euro gained 0.1% to trade at $1.165
- The GBP gained 0.1% to trade at $1.13119
- The Japanese Yen gained 0.2% to ¥111 to the dollar.
- The 10-year US treasuries yield slipped one basis point to 2.96%
- The 10-year German yield went up by less than 1 basis point to 0.41%
- The 10-year British yield went up by less than 1 basis point to 1.283%
- The West Texas Intermediate crude oil index dropped by 0.6% to $69.22 per barrel
- LME copper fell less than 0.05% to trade at $6289 per metric ton
- Gold went up by 0.1% to trade at $1224.32 per ounce.
Overall, the week ended on a muted note and it remains to be seen whether the market picks up steam when trading starts on Monday.