Thursday, August 28, 2014 -
The stock market rejected an improved Q2 GDP on fears that the Fed may be more inclined toward rate hikes – as a truce fails and war breaks out between Ukraine and Russia.
Traders rejected a better-than-expected Q2 GDP estimate today, pulling indexes back below their record setting levels. We continue to get one unbelievable government report after another, and the market appeared to knee-jerk at today’s likely manipulation of our country’s GDP finishing lower across the board.
The Dow closed down 42 points (-0.3%) to 17,080, while the S&P 500 lost 3 points (-0.2%) to 1,997, falling from the magic 2,000 it has hovered at the last couple of sessions. The Nasdaq declined 12 points (-0.3%) to 4,558 as the NYSE finished at -0.3% and the small cap Russell 2000 at -0.6%.
The optimism that has recently driven the stock market to new recod highs was absent from the get-go today, despite a better-than-expected reading on second quarter GDP – as traders either rejected the report as phony or felt that it could provide the Federal Reserve more ammunition for rate hikes.
I say an election is coming and the installed administration want to hold the edge in congress.
How about that GDP?
The U.S. Commerce Department reported that their second estimate of GDP for the second quarter was better than they had previously estimated, declaring that Q2 GDP rose by 4.2 percent in the April-to-June period.
Stocks immediately dropped in early trading and wobbled underwater the remainder of the day – either through disbelief in the government’s rosy view of our economy or through fear that this phone number could give the Federal Reserve an incentive to hike rates sooner than forecast.
Economists had been expecting the GDP reading to be lowered to at least 3.8%. So an upward revision to 4.2% comes in at 10% better than expected. This is the highest GDP reading since . . . . . .
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