The Market News Today: Final Q1 GDP Sets Tone Ahead of Core PCE Data

Q1 GDP Report and Jobless Claims to Shape Market Sentiment Today

Today’s key release is the final US Q1 2024 GDP report, with analysts predicting 1.4% quarter-over-quarter growth. This follows previous estimates of 1.6% and 1.3%. Despite slowing from Q4 2023’s 3.4% growth, the economy remains positive. Jobless claims are expected at 240k, with Q2 GDP projections at 2.0%. Additional reports include durable goods orders anticipated to fall by 0.6% and pending home sales expected to rise by 1%. These economic indicators will be closely monitored.

Micron Shares Drop 7% Despite Beating Earnings and Revenue Estimates

Micron shares fell 7% in extended trading despite exceeding earnings and revenue estimates for Q3. The company reported adjusted earnings per share of 62 cents and revenue of $6.81 billion, surpassing expectations. However, the revenue forecast for the next quarter was in line with estimates. Micron’s AI-driven data center business grew 50% quarter-over-quarter, with high bandwidth memory sold out through 2025. CEO Sanjay Mehrotra noted robust AI demand but sluggish smartphone and PC markets.

Stock Futures Dip; Investors Await Key Inflation Data, Earnings Updates

U.S. S&P 500 futures fell Thursday morning after the cash market rose the previous session for a second day. Micron shares dropped 5% after issuing Q4 revenue guidance in line with estimates. Levi Strauss fell 12% due to disappointing revenue. Bank stocks fluctuated after the Fed confirmed the resilience of major firms against a severe recession. Investors are closely watching May’s personal consumption expenditures price index for inflation data, with hopes it will indicate easing pricing pressures and potential Fed rate cuts.

Treasury Yields Rise as Investors Await Key Economic Data

U.S. Treasury yields rose Thursday as investors looked to economic data for clues on the economy and future monetary policy. The focus is on the personal consumption expenditures price index, the Fed’s preferred inflation gauge, expected Friday. Fed officials have emphasized that interest rate decisions hinge on inflation trends. Fed Governor Michelle Bowman mentioned the possibility of further rate hikes if inflation progress stalls. More comments from Fed officials are anticipated this week.

Fed Stress Test: U.S. Banks Can Withstand Severe Recession Scenarios

The Federal Reserve announced Wednesday that 31 major U.S. banks passed stress tests, showing they can withstand a severe recession while maintaining lending capabilities. The tests assumed a 10% unemployment rate, a 40% drop in commercial real estate values, and a 36% fall in housing prices. Despite nearly $685 billion in hypothetical losses, banks retained more than the minimum required capital levels. Fed Vice Chair Michael Barr highlighted the resilience of banks, though noted evolving financial risks warrant attention.