Stock markets bounce back as all eyes on US economic data and spending – National
Wall Street indexes were on track to open lower on Friday after data showed US economic growth slowed more than expected in the fourth quarter, while inflation rose in December.
US gross domestic product grew 1.4 percent last quarter, the Commerce Department’s Bureau of Economic Analysis said in its preliminary estimate of fourth-quarter GDP, well below economists’ forecast for a GDP increase of 3 percent.
GDP growth was hurt by last year’s record disruption of the government shutdown and moderate consumer spending.
A separate report showed that US inflation rose more than expected in December, with indications that it will accelerate in January. The Personal Consumption Expenditure index, the US Federal Reserve’s preferred inflation gauge, rose 0.4 percent in December month-on-month, compared to economists’ estimate of a 0.3 percent increase.
Traders are holding on to bets the Fed will likely deliver its next interest rate cut in June after the data.
“(A) combination of slower-than-expected growth in GDP output and slightly higher-than-expected PCE inflation – that’s usually not a good combination for the stock market,” said Steve Wyett, chief investment strategist at BOK Financial.
Get daily world news
Get the day’s top news, politics, economics, and current affairs, delivered to your inbox once a day.
“We don’t think the Fed needs to be aggressive in lowering rates. So on balance, the data we’re getting today still fits within that narrative.”
The S&P Global business activity survey and University of Michigan consumer sentiment data are due later in the day.
Investors were also watching for a possible decision by the US Supreme Court on US President Donald Trump’s tariffs which could be issued at 10:00 am eastern time. If he is defeated, there is a risk that more than USD$175 billion in US tax revenue will have to be returned, according to economists at the Penn-Wharton Budget Model.
At 8:56 am eastern time, the S&P 500 e-minis were down 19.25 points, or 0.28 percent, the Nasdaq 100 E-minis were down 105.75 points, or 0.43 percent, and the Dow E-minis lost 107 points, or 0.22 percent.
Private equity firm Blue Owl Capital
was down 1.8 percent in market trading, after falling 5.9 percent in the last session, when the company’s latest strategy to recoup money from a small debt fund and permanently suspend a redemption of one of its funds spooked investors and undercut peers.
Other private equity firms including KKR & Co and Apollo Global Management also fell by one percent each.
Tech stocks have been under pressure in recent months due to concerns over high valuations and limited evidence that big investments in AI are paying off. Sectors ranging from software to real estate came under fire last week with concerns that new AI models could upend their business models.
Oil prices fell from six-month highs as investors assessed a slowdown in escalating tensions between Washington and Tehran, with Trump warning Iran that it must strike a deal on its nuclear program or “really bad things” will happen.
Energy stocks including Exxon Mobil and Chevron were slightly lower after rising in the previous session.
Akamai Technologies fell 7.4 percent after the cloud company forecast first-quarter adjusted profit below Wall Street estimates.
Copart lost 10.1 percent after the provider of online auto auction services posted a drop in second-quarter profit and loss.
