From the Desk - Economic Commentary
Brandon Casey, Member Strategist - 4/25/2024
U.S. stocks are plummeting to begin the day as first quarter U.S. GDP disappointed. All three major averages are down by at least 1.3% in early trading, led by the DJIA falling 1.7%. Traders now believe that there will just be one rate cut this year as economic growth has slowed, but inflation has remained persistently high.
Looking at economic data today, U.S. GDP rose by 1.6% during the first quarter, well below expectations of 2.4% and down from 3.4% in the fourth quarter. It was also the worst quarter since the economy shrunk during the second quarter of 2022. Personal consumption increased by 2.5%, down from 3.3% last month and below estimates of 3%. The PCE Price Index rose at an annual pace of 3.4% during the quarter and the core index was up 3.7%, well above the Fed’s target.
Elsewhere, initial jobless claims unexpectedly fell to 207,000, down from 212,000. Initial claims were expected to increase to 215,000. Continuing claims fell to 1.78 million. Lastly, pending home sales rose 3.4% in March, versus expectations of increasing 0.4%.
U.S. Treasury yields are higher this morning, with the 2-year Treasury yield up 5.8 basis points to 5.00%, the 5-year Treasury yield up 6.2 basis points to 4.72%, and the 10-year Treasury yield up 5.6 basis points to 4.71%. Longer-term advance rates are higher today.
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