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US open: Stocks trade higher despite GDP miss

Thu 29 July 2021 15:21 | A A A

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(Sharecast News) - Wall Street stocks were in the green early on Thursday as investors digested worse-than-expected GDP figures, this week's jobless claims data, and the outcome of the Federal Reserve's two-day policy meeting.

As of 1520 BST, the Dow Jones Industrial Average was up 0.46% at 35,090.56, while the S&P 500 was 0.41% firmer at 4,418.48 and the Nasdaq Composite came out the gate 0.19% stronger at 14,790.93.

The Dow opened 159.63 points higher on Thursday, reversing losses recorded in the previous session as market participants digested earnings from major US firms and the outcome of the Federal Reserve's latest two-day meeting.

Overnight, the US central bank dropped a small hint that policymakers had come a bit further down the path towards announcing the start of tapering its purchases of government debt.

In its latest policy statement, the Federal Open Market Committee, the central bank's rate-setting body, said that more progress had been made towards meeting their dual mandate for maximum employment and stable inflation. The committee said it would continue "to assess progress in coming meetings" but for now, it will keep rates near zero.

In the corporate space, PayPal and Facebook were in the red after warning of significant slowdowns to growth in their quarterly earnings, while Ford traded higher after the carmaker stated it had sold more higher-priced vehicles last quarter.

Anheuser-Busch revenues exceeded pre-pandemic levels during the quarter but profits underwhelmed the Street as costs increased.

Amazon and Pinterest will both report earnings after the close.

On the macro front, US economic growth accelerated less than expected in the second quarter, although it did reclaim its pre-pandemic level. According to the Department of Labor, gross domestic product expanded at a quarterly annualised pace of 6.5%, up from 6.3% in the first quarter but below the 8.5% clip economists were anticipating. The report also highlighted rising inflation, with the PCE price index increasing 6.4%, compared with an increase of 3.85% in the first quarter, and the core PCE index rising 6.1%, compared with a 2.7% rise in the first quarter.

Elsewhere, the US jobs market improved a tad during the preceding week, the latest high-frequency data showed. According to the Department of Labor, over the week ending on 24 July initial unemployment claims fell by 24,000 to 400,000. The improvement was less than the drop to 350,000 anticipated by economists, but the difficulty of seasonally adjusting the data to take into account the carmakers' annual retooling over the summer likely meant the underlying picture was better.

Lastly, pending home sales fell 1.9% month-to-month in June, according to the National Association of Realtors, with overall sales also down 1.9% compared with June 2020.

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