Home Business Wall Street flounders between macro data (keep an eye on US GDP) and Covid fear. Tesla -4% after Musk’s new move

Wall Street flounders between macro data (keep an eye on US GDP) and Covid fear. Tesla -4% after Musk’s new move

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Wall Street is preparing for the last pre-holiday session and welcomes a roundup of data from the macroeconomic front.

Tomorrow the US stock exchange will be closed on the occasion of the Thanksgiving holiday, and then reopen the day after tomorrow, Black Friday – the starting day of the festive shopping season in the USA – in a session that will end early at 13 (19 Italian time ).

Before the start of the trading day, several data were released. Among them, the gross domestic product of the United States, which grew in the third quarter of the year by 2.1%, on an annualized basis. This is what emerges from the first revision of the data, which will be followed by a second one.
The preliminary figure had indicated an expansion equal to + 2%, compared to + 6.7% in the second quarter and + 6.4% in the first quarter.

Although revised upwards, GDP has not met the expectations of analysts, who had forecast growth of + 2.2%. Personal consumption was revised upwards from + 1.6% initially disclosed to + 1.7%. The PCE core index, an important indicator of inflation, was confirmed as growing by 4.5%.

Comforting indications from the labor market: in the week ending November 20, the number of American workers applying for unemployment benefits for the first time fell by 71,000, from 270,000 to 199,000, well below. of the 260,000 units expected and at the lowest value since 1969.
The total number of Americans benefiting from unemployment benefits in total was 2.049 million, slightly above the expected 2.033 million.

US durable goods orders were also disclosed, which fell by 0.5% in October, after falling by -0.3% in September. The figure did worse than analysts’ expectations, who had predicted a 0.2% increase.
Excluding the transport component, the trend was in line with forecasts, up by 0.5%, and as in the previous month. Also excluding the defense and aircraft components, and therefore considering capital goods, the growth was equal to + 0.6%, more than the + 0.5% estimated, although slowing down compared to + 0.8% in September. .

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At the same time, wholesale inventories were also disclosed which, again in October, rose by 2.2%, strengthening with respect to the previous increase of 1.4%. Excluding the auto sector, retail inventories advanced by 0.4%, in this case weakening from the previous increase of 0.7%. Overall, US retail inventories rose 0.1%.

The US trade balance was widespread among the data, showing that the trade deficit fell by as much as 14.6% in October, to $ 82.9 billion.

In recent sessions, investors’ attention has returned to focus on the trend in Treasury rates, which rose to 1.68% from 1.55% last week, discounting the prospect of a policy-oriented Fed. less and less accommodating monetary policy.

Today, the news coming from Europe also weighs on the equities, with Germany that is considering the imposition of a national lockdown and the vaccination obligation, due to the boom in Covid-19 cases.

At about 4 pm Italian time, the Dow Jones drops by over 155 points (-0.42%), to 35,661 points; the S&P 500 fell 0.52% to 4,665 points. The Nasdaq is -0.85% at 15,639 points.

Returning to the US, the upward trend in Treasury rates began a few days ago, with US President Joe Biden confirming the current number one Jerome Powell at the helm of the Federal Reserve. The candidates for the Fed’s top seat were Powell himself and Governor Lael Brainard. Many had pointed out that if Biden had chosen Brainard, the Fed would have taken on an even more dovish nature. Lael Brainard was chosen instead for the position of vice president of the board of governors, replacing Richard Clarida, whose term expires on January 31, 2022.

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With the confirmation of Powell at the helm of the Fed, the expectations of a Federal Reserve that will continue to go its own way, sooner or later returning to normalize rates, and therefore to raise them, have been refreshed.

In recent sessions, the rise in US rates has benefited bank stocks above all, to the detriment of growth stocks, technology stocks.

“Sure, there is more rotation,” he commented
Rob Haworth, senior investment strategist presso U.S. Bank Wealth Management.

Among the stocks, Gap thud, which collapsed by about 20%, after the retail company active in the clothing sector reported quarterly results lower than expected, due to the delays affecting production. Earnings per share stood at just 27 cents, nearly half what analysts had expected. Group CEO Sonia Syngal confirmed that Gap was the victim of the obstacles that hit the supply chain. Obstacles that “have affected our ability to fully hit strong consumer demand”. And obstacles that, in general, have hit supply chains throughout the world, with supply failing to adapt to the recovery in demand triggered by the reopening of post-Covid-19 economies.

Gap accordingly closed the third quarter with a net loss of $ 152 million, or 40 cents per share, versus net income of $ 95 million, or 25 cents per share, for the same period of 2020. Excluding extraordinary balance sheet items, earnings per share stood at 27 cents, well below the 50 cents envisaged by the consensus.

Gap has also cut its estimates for the full year: it now expects revenue growth of 20%, compared to the + 30% previously forecast, and the + 28.4% year-on-year expected by analysts. Full 2021 EPS on an adjusted basis is expected to range from $ 1.25 to $ 1.40, up from the previous $ 2.10 to $ 2.25 range and up from analysts’ estimated $ 2.20 per share.

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Tesla is also under pressure, following news of CEO and founder Elon Musk’s decision to sell an additional 934,091 shares of the electric car maker, worth $ 1.05 billion, through the exercise of options. The stock drops almost 4%.

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