Editor
The U.S. economy had a better-than-expected fourth quarter, and Wall Street is about to end its best quarterly session in years.
Wall Street is on its way to end today’s session with near-zero gains, despite the better-than-expected GDP report. The U.S. stock market traded flatly today morning, with the S&P 500 benchmark up by 0.01%, the tech-heavy composite rising by 0.02%, and the Dow Futures swinging up and down currently up by 0.03%.
Keeping with the main event, the gross domestic product index grew faster than the estimated fourth quarter. The data shows that the U.S. GDP growth report was up by 3.4% annually, slightly higher than the previous estimation of 3.2% annually. The report also shows that most upgrades were seen in consumer spending, nonresidential fixed investment, and state and local government spending.
With this report, most investors can agree that interest rates will become less consistent compared to last year. The market’s resilience and its county’s upgrades have contributed to Wall Street and stock market gains this quarter; additionally, the stock market is daily reaching record highs, which makes this quarter the best quarter the market has seen since the economic turmoil.
And it’s not only the AI revolution; the market has reached all of the S&P 500 sectors. Still, the real estate market remains under pressure due to high yields and a slow recovery path.
Moving to the labor market, initial claims for state unemployment benefits fell by 2,000 to 210,000 for the week ended March 23.
As investors are still digesting these data, some are hesitant to build on previous session gains due to Fed Governor Waller’s remarks, in which he suggested that there is no need to rush interest rate cuts.
Waller acknowledged eventual rate cuts but cited hotter-than-expected inflation as a reason to maintain higher rates for now. The Fed had signaled potential rate cuts in 2024, but recent comments have been less dovish. “The timing of the rate cuts, which was of paramount importance last year, has become less of a concern, largely because of the economic resilience we have seen so far this year,” Investing Group Leader Lawrence Fuller notes.
So what does this data mean? Tomorrow will be the last session of this quarter, and the historical data shows that when the S&P 500 reaches 8% gains in the first quarter, the probability of keeping those gains high is high for the rest of the quarters. This supports the idea that the U.S. economy will recover faster in the rest of the year. Which supports the soft landing idea. Still, interest rate cuts might have become less confounded, but their role in taming inflation and keeping the market’s momentum steady is highly impotent and dangerous at the same time.
Briefly moving to the corporate news subject, RH (NYSE: RH) stock surged 12% despite fourth-quarter results missing expectations.
Walgreens Boots (NASDAQ: WBA) stock climbed 4.4% on better-than-expected fiscal second-quarter sales.
Walgreens revised its full-year adjusted earnings outlook lower due to a challenging U.S. retail environment.
Take-Two Interactive Software (NASDAQ: TTWO) stock slipped 0.8% after announcing a $460 million acquisition of U.S. game developer Gearbox Entertainment.
Home Depot’s (NYSE: HD) stock dipped 1% following its announcement of acquiring building materials supplier SRS Distribution in a $18.25 billion deal.
