Atlanta Fed Raises GDP Estimate to 3.1% + The World Markets and Commodities Wrap

$DIA $SPY $QQQ $RUTX $XAU, $XAG, $CU, $OIL, $USO, $VXX

FLASH: The S&P 500 staged a 70-pt rally during the final hr of trade, which led to a significant improvement in final sector standings, though all 11 sectors finished in the Red.

The US economy is likely growing at a 3.1% annualized rate in Q-1, based on the latest economic data, despite the coronavirus, the Atlanta Federal Reserve said.

The Atlanta Fed’s GDP program late last week estimated a 2.7% pace.

The Trump Administration may take targeted steps to stimulate the US economy amid the coronavirus outbreak that is likely to temporarily pressure some sectors

New orders for US-made goods fell more than expected in January and could drop further as a worldwide coronavirus outbreak strains supply chains and undercuts the manufacturing sector, which had recently shown signs of stabilizing after a prolonged slump.

Factory goods orders decreased 0.5% as an increase in demand for machinery was offset by a decline in transportation equipment, the Commerce Department said Thursday. 

Data for December was revised slightly up to show orders rising 1.9% instead of rebounding 1.8% as previously reported.

Economists say fiscal stimulus is needed to cushion the economy against the disruptions from the coronavirus, though many are not yet forecasting a recession. Growth estimates for 1-H are around 1%, Reuters explained.

Sluggish productivity is 1 of the reasons the economy has struggled to achieve The Trump Administration’s target of 3% annual GDP growth. The economy grew 2.3% in Y 2019, the slowest in 3 yrs, after logging 2.9% growth in Y 2018.

The 2 Fed GDP revisions came just hours after US employers maintained a robust pace of hiring in February, giving the economy a strong boost heading into the coronavirus outbreak, which has kindled fears of a recession and prompted an emergency interest rate cut Tuesday of 50 bpts from the Fed, Reuters explained.

The Labor Department’s closely watched NFPs (monthly employment report) on Friday also showed solid wage growth and the unemployment rate falling back to near a 50-yr low of 3.5%. Employers also increased hours for workers last month.

In the Markets

Friday, after sharply through the day as fear hammered markets, then in the last hour of trading amid hints from Fed officials that they may offer more support to the economy the market reversed and cut the loss from nearly 800 to 256 pts.

By the end of trading, the S&P 500 had more than halved its loss for the day to 1.7% and even locked in a gainer for the week.

The S&P 500 fell 51.57, or 1.7%, to 2,972.37. The DJIA lost 256.50, or 1%, to 25,864.78. The NAS Comp fell 162.98, or 1.9%, to 8,575.62.

The yield on the 10-yr T-Note dropped to 0.78% from 0.92% late Thursday. It rallied from as low as 0.66% earlier in the day, according to Tradweb.

WTI Crude Oil fell 4.62, or 10.1%, to 41.28 bbl. Brent Crude dropped 4.72, or 9.4%, to 45.27 bbl.

In Europe, the French CAC 40 dropped 4.1%, and the German DAX lost 3.4%. The FTSE 100 in London fell 3.6%.

Japan’s Nikkei 225 fell 2.7%, SKorea’s Kospi lost 2.2% and stocks in Shanghai dropped 1.2%.

Gold rose 4.40 to settle at 1,672.40 oz. Silver fell 13c to 17.26 oz, and Copper slipped 1c to 2.56 lb.

Wholesale gasoline fell 13c to 1.39 gal, heating oil fell 10c to 1.39 gal and Nat Gas lost 6c to 1.71 per 1,000 cft.

HeffX-LTN’s overall technical analysis for the major US stock markets for the week ended 6 March 2020 is Neutral to Bullish.

  • NAS Comp -4.4% YTD
  • S&P 500 -8.0% YTD
  • DJIA -9.4% YTD
  • Russell 2000 -13.1% YTD

Looking ahead: There is no economic data on Monday’s schedule

Have a terrific weekend

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