The U.S. gross domestic product (GDP) grew by a negative 0.9% in the second quarter and fell into a “technical recession”. Coupled with the pessimistic financial forecasts of Facebook’s parent company Meta and Qualcomm, U.S. stocks opened flat and lower on Thursday (28th).
Before the deadline, the Dow Jones Industrial Average fell more than 150 points or nearly 0.5%, the Nasdaq Composite fell more than 100 points or nearly 1%, the S&P 500 fell 0.6%, and the Philadelphia Semiconductor Index fell more than 1%.
The U.S. Commerce Department announced this week that economic growth fell 0.9% in the second quarter, below expectations for a 0.3% increase, and GDP shrank for two consecutive quarters, reaching what is generally defined as a technical recession.
The Commerce Department’s preliminary estimates showed that high inflation weakened consumer spending, while the Federal Reserve (Fed) sharply raised interest rates, hampering business investment and housing demand, after the first quarter GDP contracted by 1.6%. slip.
At the same time, the U.S. Department of Labor announced the latest unemployment benefits data on the same day. The number of people receiving unemployment benefits last week was 256,000, a decrease of 5,000 from the previously revised 261,000, slightly higher than the market expectation of 253,000, and for four weeks It fell for the first time since then, but remained near the high since November last year, indicating a continued slowdown in the labor market.
The Fed raised its benchmark interest rate by 3 yards (75 basis points) yesterday as expected, and reiterated the importance of keeping inflation in check. Fed Chairman Powell hinted yesterday that the pace of future interest rate hikes depends on economic data, and the weak economic data has increased the market’s expectations for the Fed’s slow pace of interest rate hikes. However, there is still a long time before the Fed’s next monetary policy meeting, and investors need to continue to pay attention to the follow-up economic data.
In terms of individual stocks, Facebook’s parent company Meta (META-US) saw a larger-than-expected decline in revenue and weaker profits in the second quarter, and released a surprisingly weak financial forecast, indicating that revenue growth will decline again. The stock price fell more than 5%. In addition, the financial forecast of global IC design leader Qualcomm (QCOM-US) is also bleak. It is expected that cooling demand for smart phones will hit its mobile phone chip business in the fourth fiscal quarter, which fell nearly 3% in early trading.
As of 21:00 on Thursday (28th) Taipei time:
Stocks in focus:
Spirit Airlines (SAVE-US) rose 3.66% to $25.19 a share in early trade
JetBlue Airways (JBLU-US) reached an agreement on Thursday to acquire Spirit Airlines, hours after budget airline Spirit Airlines ended a merger agreement with Frontier Airlines (ULCC-US). JetBlue Airways said it will buy Spirit for $33.50 per share in cash.
Harley-Davidson (HOG-US) rose 9.31% to $37.49 a share in early trade
Harley-Davidson reported profit growth for the last quarter before the bell and kept its full-year revenue forecast unchanged, even as a two-week shutdown hurt sales in the second quarter.
In the second quarter, sales of locomotives and related products fell by about 5% to $1.27 billion, and total revenue fell by 4% to about $1.46 billion; net profit was $215.8 million, or $1.46 per share, compared with $206.3 million in the same period last year, That’s $1.33 per share.
Pfizer (PFE-US) fell 3.86% to $49.56 a share in early trade
U.S. drugmaker Pfizer’s latest earnings report beat Wall Street’s expectations, helped by sales of its coronavirus vaccine and antiviral treatment Paxlovid. Second-quarter revenue rose 47% from the same period last year to $27.7 billion; net profit was $9.9 billion, up 78% from the same period in 2021; adjusted earnings per share were reported at $2.04, beating expectations of $1.78.
Today’s key economic data: Initial jobless claims were reported at 256,000 last week, 253,000 expected, and 261,000 last week. Last week’s continuing jobless claims were 1.359 million, expected 1.38 million, and the previous value was 1.384 million US second quarter real GDP equivalent Preliminary annual rate reported -0.9%, expected 0.5%, previous value -1.6% Wall Street Analysis:
Richard Flynn, managing director of Charles Schwab UK, said the stock market is expected to be highly volatile as the tug-of-war between inflation and recession unfolds in the second half of the year.
Laura Fitzsimmons, executive director of macro sales at JPMorgan Australia, said that at current levels, the Fed is likely to slow the pace of rate hikes, but added that financial industry players have reservations about the Fed cutting rates in 2023.