Tue, 05 Dec 2023

NEW YORK, New York - The U.S. economy surged in the third quarter which normally should ignite stocks, however a heavy sell-off followed the announcement.

Rather than cheer the stronger economic climate, and the potential for companies to do well, investors focused on the likely Fed reaction to the data, in terms of setting interets rates. The consensus being the sharply improved GDP will result in the Fed hiking interest rates.

Real gross domestic product (GDP) increased at an annual rate of 4.9 percent in the third quarter of 2023, against expectations of 4.7 percent, according to the "advance" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 2.1 percent.

S&P 500 (^GSPC)

The Standard and Poor's 500, a widely-watched indicator of the U.S. stock market, closed at 4,137.23, down 49.54 points or 1.18 percent. With a trading volume of 2.915 billion shares, the index's dip left some investors cautious about the overall market sentiment.

Dow Jones Industrial Average (^DJI)

The Dow Jones Industrial Average, another influential gauge of the U.S. stock market, ended the day at 32,784.30, down 251.63 points or 0.76 percent. This performance was closely watched by traders and analysts alike, as the index's 372.249 million shares in trading volume suggested moderate activity.

NASDAQ Composite (^IXIC)

The tech-heavy NASDAQ Composite faced significant downward pressure, closing at 12,595.61, a decrease of 225.62 points or 1.76 percent. With a robust trading volume of 4.117 billion shares, the index's decline was notable, reflecting a challenging day for technology stocks and their investors.

Foreign Exchange Markets see U.S. Dollar forge ahead Thursday

The U.S. dollar reacted positively to Thursday's release of GDP data for the third quarter, as bond yield spiked higher. Here are the latest exchange rates for the world's major currencies:

EUR/USD - The euro to U.S. dollar exchange rate recorded a decrease of 0.10 percent, settling at 1.0555, with a reduction of 0.0010.

USD/JPY - The Japanese yen weakened to a level above 150, which it is understood the country's central bank had been committed to defending. The yen retreated 0.11 percent, to 150.35, with a loss of 0.16.

USD/CAD - The Canadian dollar exchange rate wakened 0.18 percent to 1.3820, with a loss of 0.0024.

GBP/USD - The British pound to edged up 0.16 percent to 1.2130 Thursday, with an increase of 0.0019. This after the pound fell below 1.2100 earlier in the day.

USD/CHF - The Swiss franc exchange rate saw a notable decrease of 0.28 percent, recahingt 0.8992, with a loss of 0.0024.

AUD/USD - The Australian dollar posted a gain of 0.26 percent, settling at 0.6324, with an increase of 0.0016.

NZD/USD - The New Zealand dollar experienced a significant increase of 0.32 percent to 0.5820.

Global Stock Markets Mostly Decline on Thursday

In a day filled with weakness in financial markets, stocks were largely sold off, particularly in the UK, Europe, and Asia, as well as in the United State and Canada. Here are the latest quotes for some of the world's leading stock indices:


S&P/TSX Composite Index (^GSPTSE)

In the Canadian market, the S&P/TSX Composite Index closed at 18,875.31, down 72.54 points or 0.38 percent. Trading volume for this index reached 192.903 million shares, as investors and analysts in Canada assessed the economic landscape.


FTSE 100 - The London-based FTSE 100 index saw a decline of 0.81 percent, closing at 7,354.57, with a decrease of 59.77 points.


DAX PERFORMANCE-INDEX - Germany's DAX index faced a substantial downturn of 1.08 percent, settling at 14,731.05 after losing 161.13 points.

CAC 40 - France's CAC 40 index faced a milder setback, losing 0.38 percent Thursday, and closing at 6,888.96, down 26.11 points.

ESTX 50 PR.EUR - The Eurozone's ESTX 50 PR.EUR index decreased by 0.59 percent, closing at 4,049.40 after losing 23.95 points.

Euronext 100 Index - The Euronext 100 Index faced a 0.38 percent decline, closing at 1,281.47, with a loss of 4.91 points.

BEL 20 - Belgium's BEL 20 index saw a decrease of 0.44 percent Thursday, closing at 3,299.74, after losing 14.60 points.


MOEX Russia Index - The MOEX Russia Index experienced a slight downturn of 0.19 percent, closing at 2,222.51, with a loss of 4.14 points.


Nikkei 225 - Japan's Nikkei 225 index experienced a significant decline of 2.14 percent, ending at 30,601.78 after shedding 668.14 points.

HANG SENG INDEX - Hong Kong's Hang Seng Index fell by 0.24 percent Thursday, closing at 17,044.61 after a loss of 40.72 points.

SSE Composite Index - The Shanghai Stock Exchange (SSE) Composite Index, on the other hand, managed to gain 0.48 percent, closing at 2,988.30, with an increase of 14.19 points.

Shenzhen Index - China's Shenzhen Index also posted gains, with a 0.40 percent increase, closing at 9,566.10, up by 37.80 points.

STI Index - Singapore's STI Index faced a 0.24 percent decline Thursday, closing at 3,071.31 after losing 7.47 points.

S&P BSE SENSEX - India's S&P BSE SENSEX saw a substantial drop of 1.41 percent, closing at 63,148.15 after losing 900.91 points.

NIFTY 50 - Meanwhile India's NIFTY 50 index faced a significant decline of 1.39 percent, closing at 18,857.25, with a loss of 264.90 points.

IDX COMPOSITE - Indonesia's IDX Composite index faced a significant downturn of 1.75 percent Thursday, closing at 6,714.52, with a decrease of 119.87 points.

FTSE Bursa Malaysia KLCI - Malaysia's FTSE Bursa Malaysia KLCI index experienced a minor setback of 0.13 percent, closing at 1,440.60, down 1.91 points.

KOSPI Composite Index - South Korea's KOSPI Composite Index faced a substantial decline of 2.71 percent, closing at 2,299.08, with a loss of 64.09 points.

TSEC weighted index - Taiwan's TSEC weighted index decreased by 1.74 percent, closing at 16,073.74, with a loss of 285.15 points.


S&P/ASX 200 - Australia's S&P/ASX 200 index faced a slight decrease of 0.61 percent Thursday, closing at 6,812.30, down by 42.00 points.

S&P/NZX 50 INDEX GROSS - New Zealand's S&P/NZX 50 INDEX GROSS decreased by 0.33 percent, closing at 10,848.54 after losing 35.50 points.

ALL ORDINARIES - The Australian ALL ORDINARIES index meanwhile faced a 0.64 percent decline, closing at 7,001.10, with a loss of 45.20 points.


Top 40 USD Net TRI Index - South Africa's Top 40 USD Net TRI Index inched up by 0.12 percent, closing at 3,643.18, with an increase of 4.51 points.


TA-125 - Israel's TA-125 index experienced a 1.19 percent decrease, closing at 1,608.42, with a loss of 19.33 points Thursday as the Israeli army carried out a limited hours-long ground invasion of Gaza.

EGX 30 Price Return Index - Egypt's EGX 30 Price Return Index saw a positive gain of 0.56 percent, closing at 23,262.30, with a trading volume of 388.608 million shares.

The downward trend in U.S. and global stocks show no signs of ending, particularly as good news such as Thursday's third quarter U.S. GDP data had no positive impact.

Real GDP: Percent change from preceding quarter

The increase in real GDP reflected increases in consumer spending, private inventory investment, exports, state and local government spending, federal government spending, and residential fixed investment that were partly offset by a decrease in nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased, the Bureau of Economic Analysis report released on Thursday said.

The increase in consumer spending reflected increases in both services and goods. Within services, the leading contributors were housing and utilities, health care, financial services and insurance, and food services and accommodations. Within goods, the leading contributors to the increase were other nondurable goods (led by prescription drugs) as well as recreational goods and vehicles. The increase in private inventory investment reflected increases in manufacturing and retail trade. Within nonresidential fixed investment, a decrease in equipment was partly offset by increases in intellectual property products and structures.

Compared to the second quarter, the acceleration in real GDP in the third quarter reflected accelerations in consumer spending, private inventory investment, and federal government spending and upturns in exports and residential fixed investment. These movements were partly offset by a downturn in nonresidential fixed investment and a deceleration in state and local government spending. Imports turned up, the report said.

Current dollar GDP increased 8.5 percent at an annual rate, or $560.5 billion, in the third quarter to a level of $27.62 trillion. In the second quarter, GDP increased 3.8 percent, or $249.4 billion.

The price index for gross domestic purchases increased 3.0 percent in the third quarter, compared with an increase of 1.4 percent in the second quarter (table 4). The personal consumption expenditures (PCE) price index increased 2.9 percent, compared with an increase of 2.5 percent. Excluding food and energy prices, the PCE price index increased 2.4 percent, compared with an increase of 3.7 percent.

Personal Income

Current-dollar personal income increased $199.5 billion in the third quarter, compared with an increase of $239.6 billion in the second quarter. The increase reflected increases in compensation, proprietors' income, personal income receipts on assets, and rental income of persons that were partly offset by a decrease in personal current transfer receipts (table 8).

Disposable personal income increased $95.8 billion, or 1.9 percent, in the third quarter, compared with an increase of $296.5 billion, or 6.1 percent, in the second quarter. Real disposable personal income decreased 1.0 percent, in contrast to an increase of 3.5 percent.

Personal saving was $776.9 billion in the third quarter, compared with $1.04 trillion in the second quarter. The personal saving rate, personal saving as a percentage of disposable personal income, was 3.8 percent in the third quarter, compared with 5.2 percent in the second quarter.

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