US Stocks solidly lower following disappointing economic data
New York (May 29) U.S. stocks sank in midday trading Friday following a report that the economy shrank in the first three months of the year. The revised data, published early Friday, showed that U.S. gross domestic product contracted 0.7 percent in the first quarter. That was worse than the government’s initial estimate of growth of 0.2 percent.
KEEPING SCORE: The Dow Jones industrial average lost 98 points, or 0.6 percent, to 18,027 as of 12:19 p.m. Eastern. The Standard & Poor’s 500 index lost eight points, or 0.4 percent, to 2,113 and the Nasdaq composite lost 13 points, or 0.3 percent, to 5,084.
OTHER BAD DATA: Investors also had two other disappointing pieces of economic news to work through. A Chicago manufacturing survey fell to 46.2, well below the reading of 53 that economists were anticipating. A report on consumer sentiment fell to a six-month low in May.
GREEK CONFUSION: Though Greek Prime Minister Alexis Tsipras has said a deal with the country’s creditors could be ready by the weekend, others are less confident.
Christine Lagarde, the head of the International Monetary Fund, said a Greek exit from the euro remains a possibility, while German Finance Minister Wolfgang Schaeuble also appeared cautious in comments following the end of a meeting of top finance officials in Berlin. Without a deal for remaining bailout cash soon, Greece faces going bankrupt and ditching the euro. Figures from the European Central Bank showing Greek bank deposits at their lowest in more than a decade only added to the prevailing gloom.
ANALYST TAKE: “With it being a Friday and the uncertainty around the Greece situation and the disappointing economic data, naturally investors are taking some of their positions off the table,” said JJ Kinahan, a strategist at TDAmeritrade.
LET’S PLAY: GameStop rose $2.68, or 7.5 percent, to $44.07. The video game retailer posted results that exceeded analysts’ estimates, helped by the sale of recently released video game titles.
ENERGY: Benchmark crude rose as U.S. supplies declined more than expected. Oil rose $1.98 to $59.65 a barrel on the New York Mercantile Exchange. Brent crude rose $2.17 to $64.75 a barrel in London.
BONDS, CURRENCIES: U.S. government bond prices rose. The yield on the 10-year Treasury note fell to 2.10 percent. The euro rose to $1.0982 to the dollar, while the dollar rose to 124.10 yen against the Japanese currency.
Source: abgJournal
