US close: Shares jump on Q1 GDP beat

Stocks put paid to a mixed week with a positive close on Friday following a much stronger than expected reading on first-quarter gross domestic product, alongside another batch of corporate earnings.

By the end of the trading day, the Dow Jones Industrial Average had added 0.31% to finish at 26,543.33, while the S&P 500 rose 0.47% to 2,939.88 and the Nasdaq Composite gained 0.34% to 8,146.40.

Commenting on the latest GDP numbers, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "Overall, though, a strong report, and remember that Q1 GDP tends to be under-reported; the Cleveland Fed estimated last week that the mean undershoot is about 0.6pp, so conceivably Q1 growth in reality was closer to 4% than 3%.

"That's astonishing after the drop in stocks in Q4, demonstrating yet again that the market is not the economy, but also demonstrating, perhaps, the power of the Fed."

In the background meanwhile, the latest Bloomberg survey of Fed watchers showed that most economists anticipated the US central bank would stay put on short-term rates through the end of 2020, with only two projecting a cut in 2019, versus nearly 70% odds of a reduction as per the latest pricing on Fed funds futures.

But while the S&P 500 managed to eke out a fresh record closing higher after adding 34.86 points over the course of the week, the Dow ended the week lower.

To take note, energy was a drag on the broader stockmarket after the US President 'tweeted' to say he had called OPEC to lower prices, sending front month West Texas Intermediate down by 2.93% to $63.30 a barrel on the NYMEX.

From a sector standpoint, the strongest areas of the stockmarket were: Coal (3.27%), Media Agencies (3.24%) and Medical Supplies (2.74%).

At the individual company level, Amazon was up 2.54% in early trading after the global technology company posted its first-quarter earnings results after the close of US markets closed on Thursday.

Amazon's results for the three months ended 31 March reflected an ongoing change at the company with slightly lower growth rates but bigger profit margins.

Discussing the results, analysts at Shore Capital said: "The Amazon juggernaut continues at pace, demonstrated in the Q1 results. Our key takeaway is that whilst the revenue growth has slowed, the sales mix towards services is starting to build operating margins. The investment in Q2 in Prime delivery is further evidence of the relentless focus on the end consume."

Exxon Mobil lost 2.1% as the oil and gas giant revealed that its first-quarter profits fell nearly 50% from a year ago, hit by poor results in refining and chemicals, and American Airlines flew 1.05% lower after the carrier lowered its earnings forecast for the year.

Tyremaker Goodyear was 1.69% lower after reporting a soft first-quarter, with tyre unit volume dropping 3% and operating income slide from $281m to $190 on the back of higher than expected material costs and unfavourable currency movements.

Intel plunged 8.99% after the chipmaker provided investors with some weak guidance, putting its stocks dangerously close to its biggest single-day decline in more than 10 years.

On the data front, America's economy grew much more quickly than anticipated at the start of 2019, helped in particular by strong contributions from some of the most volatile components of demand, such as foreign trade and inventory accumulation

According to the Department of Commerce, the annualised rate of growth in first-quarter gross domestic product hit 3.2%.

That followed growth of 2.2% at the tail-end of 2018.

Nonetheless, final domestic demand to domestic purchasers, which strips out foreign demand and the contribution to GDP from company stockpiling, slowed from the quarterly annualised pace of 2.1% observed over the final three months of 2018 to only 1.4%.

Some measures of price pressures also ebbed significantly, with the year-on-year rate of PCE price gains slipping from 1.9% to 1.4%.

All told, the yield on the benchmark two year US Treasury note retreated by five basis points to 2.28%.

On a more positive note, the personal savings rate rose from 6.8% to 7.0%.

Elsewhere, consumer sentiment fell less than originally thought during April, ending the month slightly ahead of estimates.

The University of Michigan's final April sentiment index slipped to 97.2 from the 98.4 recorded a month earlier, beating preliminary readings of 96.9 and consensus forecasts on the Street.

However, the gauge of current conditions was weaker than previously reported but the expectations index came in slightly stronger.

Dow Jones - Risers

Unitedhealth Group Inc. (UNH) $237.00 2.69%
Procter & Gamble Co. (PG) $105.86 2.50%
Caterpillar Inc. (CAT) $138.96 2.13%
Walt Disney Co. (DIS) $139.92 1.95%
American Express Co. (AXP) $117.60 1.48%
Verizon Communications Inc. (VZ) $56.58 1.31%
Visa Inc. (V) $162.95 1.19%
Dowdupont Inc. (DWDP) $38.00 1.06%
Pfizer Inc. (PFE) $39.96 0.91%
Coca-Cola Co. (KO) $48.26 0.88%

Dow Jones - Fallers

Intel Corp. (INTC) $52.43 -8.99%
Exxon Mobil Corp. (XOM) $80.49 -2.10%
Walmart Inc. (WMT) $101.51 -1.92%
Home Depot Inc. (HD) $203.61 -1.40%
Cisco Systems Inc. (CSCO) $55.88 -0.80%
Chevron Corp. (CVX) $117.08 -0.68%
Boeing Co. (BA) $380.78 -0.53%
Apple Inc. (AAPL) $204.30 -0.48%
McDonald's Corp. (MCD) $197.42 -0.26%
Walgreens Boots Alliance, Inc. (WBA) $52.85 0.32%

S&P 500 - Risers

Ford Motor Co. (F) $10.41 10.74%
Align Technology Inc. (ALGN) $317.98 7.16%
Capital One Financial Corp. (COF) $93.73 6.45%
VeriSign Inc. (VRSN) $199.86 5.65%
Interpublic Group of Companies Inc. (IPG) $23.45 5.25%
General Electric Co. (GE) $9.57 4.93%
Centene Corp. (CNC) $52.63 4.78%
Discover Financial Services (DFS) $81.19 4.72%
Weyerhaeuser Co. (WY) $27.37 4.23%
Anthem Inc (ANTM) $266.46 4.10%

S&P 500 - Fallers

Intel Corp. (INTC) $52.43 -8.99%
Target Corp. (TGT) $77.11 -5.65%
Nvidia Corp. (NVDA) $178.09 -4.72%
Helmerich & Payne Inc. (HP) $58.71 -4.44%
Eog Resources Inc. (EOG) $97.88 -4.11%
Intuit Inc. (INTU) $253.58 -3.89%
Western Digital Corp. (WDC) $50.92 -3.83%
Juniper Networks Inc. (JNPR) $27.25 -3.09%
Marathon Oil Corp. (MRO) $17.37 -3.07%
Qorvo, Inc. (QRVO) $74.99 -2.99%

Nasdaq 100 - Risers

Align Technology Inc. (ALGN) $317.98 7.16%
Take-Two Interactive Software Inc. (TTWO) $96.25 3.61%
Monster Beverage Corp (MNST) $59.65 3.02%
Workday, Inc. (WDAY) $204.41 2.81%
Dish Network Corp. (DISH) $34.79 2.75%
Xilinx Inc. (XLNX) $118.93 2.65%
Amazon.Com Inc. (AMZN) $1,950.63 2.54%
Vodafone Group Plc ADS (VOD) $18.37 2.28%
Idexx Laboratories Inc. (IDXX) $232.47 2.11%
Expedia Group Inc. (EXPE) $127.76 2.03%

Nasdaq 100 - Fallers

Intel Corp. (INTC) $52.43 -8.99%
Tesla Inc (TSLA) $235.14 -5.04%
Nvidia Corp. (NVDA) $178.09 -4.72%
Intuit Inc. (INTU) $253.58 -3.89%
Western Digital Corp. (WDC) $50.92 -3.83%
Seagate Technology Plc (STX) $44.99 -2.34%
Regeneron Pharmaceuticals Inc. (REGN) $343.66 -1.81%
Skyworks Solutions Inc. (SWKS) $87.02 -1.71%
Illumina Inc. (ILMN) $314.04 -1.62%
Micron Technology Inc. (MU) $42.10 -1.52%