Economic Journal - Friday, 5/29/2015

(As of 7:15 am PST)

We’re off to a rocky start on Wall Street this morning as investors took in mostly disappointing data on the US economy. Most notably, a report on first quarter GDP showed the US economy contracted in the first quarter for the second consecutive year. Gross domestic product shrank by -0.7% in the quarter. A growing trade deficit due to a rise in imports cut into growth in the first quarter while consumer spending also slowed below original forecasts. Economists were forecasting a -1.0% GDP decline in Q1. In other economic news, a report on the Chicago manufacturing PMI fell sharply. The disappointing data this morning has investors confused on what this means for a Fed rate hike. The “good news bad news” trade seems tired, with markets not reacting to negative or positive data as they once did. We seem to be stuck in a range trade for now, until some more consistent data comes out and a clear direction from the Fed on the plan to raise interest rates unfolds. Across the pond today, European stocks are heading towards a mixed close while Asian markets wrapped up the week near the unchanged line. Gold and oil are pushing higher while the US dollar is flat. Despite a volatile week for US markets, the month of May was generally positive for stocks with the S&P500 up nearly 1.7% while the Nasdaq is looking at monthly gains of 3%.

Economic Journal - Thursday, 5/28/2015

(As of 7:05 am PST)

US equities are lower this morning after rallying back yesterday in what has been a back and forth week for the stock market. Renewed fears over the timing of a Federal Reserve interest rate hike sent stock futures lower early this morning. San Francisco Fed President, John Williams, who is speaking at a conference in Singapore this week commented early Thursday that he expects the Fed to raise rates later this year. The Fed officials' remarks are a reiteration of recent views from the central bank that rates will likely rise in 2015. Adding to the negative sentiment today is news out of Europe that a reported deal between Greece and its creditors hasn’t been finalized. Yesterday’s stock market rally was due in part to comments from Greece’s Prime Minister Alexis Tsipras that suggested the debt-laden country was nearing a deal. Late Wednesday afternoon, those comments were downplayed by other European officials including IMF Director Christine Lagarde who indicated that a deal had not been reached. The back on forth on Greece has sent European stocks lower today. US economic data is largely being overshadowed today by the interest rate and Greece stories. Jobless claims rose more than expected last week while a report on pending home sales showed sales jumped in April to the highest level in nine years. Oil prices are lower ahead of a report on crude inventories while gold is also lower. Interest rates are flat while the US dollar is up. It’s a busy morning for stocks with lots of macro stories tugging on investor sentiment. Expect volatility to pick up as the week wears on.

Economic Journal - Wednesday, 5/27/2015

(As of 7:15 am PST)

Stocks are rebounding from yesterday’s losses which saw the Dow and S&P500 suffer their biggest one day declines in over three weeks. A strengthening dollar on the heels of positive economic data and hawkish comments from Fed Chair Janet Yellen last week sent stocks tumbling Tuesday. Markets have recovered some but not all losses from yesterday as volume still remains relatively low. A light data calendar today and a quiet Fed have investors looking elsewhere for news. Earnings from Tiffany & Co. beat expectations sending the stock higher by 7%, while a report from Michael Kors missed estimates sending shares tumbling in the early going. Overseas action is quiet today, with not much to update out of the Greece situation. Asian markets finished Wednesday’s session mixed while European stocks are rallying after yesterday’s selloff. Gold and oil are mixed while interest rates inched higher after falling yesterday.