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,Dow Jones Industrial Averagefell more than 150 points or nearly 0.5%,Nasdaq Composite Indexfell more than 100 points or nearly 1%,S&P 500 Indexdown 0.6%,Philadelphia SemiconductorThe index fell more than 1%.
The U.S. Commerce Department announced this week that economic growth declined 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, following 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 parent company Meta (META-US) in the second quarter fell more than market expectations and earnings were weak, and released a surprisingly weak forecast that suggested revenue growth would decline once more, sending its shares down more than 5% in early trade. In addition, the global IC design leader Qualcomm (QCOM-US) was also bleak in its forecast, expecting cooling smartphone demand to hit its handset chip business in the fourth quarter, down nearly 3 percent in early trade.
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
Ended up with Frontier Airlines (ULCC-US), JetBlue Airways (JBLU-US) on Thursday (28th) reached an agreement to acquire Spirit Airlines. 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 regarding 5% to $1.27 billion, and total revenue fell by 4% to regarding $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 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:
- The number of people receiving unemployment benefits last week reported 256,000, expected 253,000, and the previous value of 261,000
- Last week, the number of people receiving unemployment benefits reported 1.359 million, 1.38 million is expected, and the previous value was 1.384 million
- U.S. second-quarter real GDP annualized quarterly initial value 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 regarding the Fed cutting rates in 2023.
