US Economic Data Strong, Atlanta Fed Raises GDP View to 4.2%
$DIA, $SPY, $QQQ, $RUTX, $USO, $VXX
- US stocks retreated Wednesday in a healthy Bull market pullback
The US economy is expanding at a 4.2% annualized rate in Q-3, the Atlanta Federal Reserve’s GDPNow forecast model showed on Wednesday, following the release of the latest data on producer prices and wholesale trade.
That was a bit faster than the 4.1% pace calculated on 5 October by the Atlanta Fed’s forecast program.
The next GDPNow update is Monday, 15 October.
US producer prices increased 0.2 percent in September, came in line with expectations, while a revision to wholesale inventory estimates for August showed the biggest jump in nearly 5 years, beating forecasts.
A rise in services prices offset a slight drop in prices for goods, including a 3.5% drop in gasoline prices.
Final demand prices had fallen 0.1% in August. In the 12 months through September, the PPI (producer price index) rose 2.6%,a bit less than expected.
It was the 1st monthly rise in the PPI since June.
Yields on T-Bonds rose to session highs while USD fell. US stocks traded lower with the DJIA -3% on the day.
Data on producer prices feed into inflation indicators watched by the Fede, which has been raising rates in hopes of keeping a price index based on personal consumption expenditures near the central bank’s 2% target.
The Fed raised rates last month for the 3rd time this year and is expected to do so again in December.
Economists polled by Reuters had forecast the PPI increasing 0.2% in September and advancing 2.8% Y-Y.
The rise in wholesale inventories was slightly above the 0.8% expected by analysts. The component of inventories that feeds into estimates of GDP growth rose 0.7%.
After declining inventories subtracted more than a percentage point from GDP growth in the April-June quarter, economists expect investments in inventories to support GDP going forward.
A Key gauge of underlying producer price pressures that excludes food, energy and trade services rose 0.4% last month, the largest increase since January. The core PPI had risen 0.1% in August.
In the 12 months through September, the core PPI rose 2.9%, the same as the month before.
The slight decline in goods prices was the first since May 2017, led by a 0.8% fall in energy prices and a 0.6% drop in food. Excluding food and energy, goods prices rose 0.2%.
The report also hinted at the ongoing impact of The Trump Administration’s trade policies. Soybeans have been the target of trade actions by China in retaliation for US imposed tariffs.
Prices for steel mill products were unchanged month over month, but have risen 18% since September 2017. President Trump imposed a 25% levy on imported steel in the Spring.
Wednesday, the US major stock market indexes finished at: DJIA -831.83 at 25598.74, NAS Comp -315.97 at 7422.24, S&P 500 -94.66 at 2785.52
Volume: Trade on the NYSE came in at 1.07-B/shares exchanged.
The CBOE Volatility Index spiked 36.2% to 21.73, its highest mark since late March.
Hurricane Michael made landfall in the Florida Panhandle as a Category 4 storm. The storm has disrupted Crude Oil production in the Gulf of Mexico, but Crude Oil prices fell Wednesday retreating from the 4-year high hit earlier this month.
NYMEX WTI Crude Oil dropped 2.5% to 73.09 bbl at the close in NY.
- NAS Comp +7.5% YTD
- S&P 500 +4.2% YTD
- DJIA +3.6% YTD
- Russell 2000 +2.6% YTD
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