Stock Market Forecast, Better than Expected Growth and Manufacturing Fail to Lift Share Prices

US stock prices moved lower on Thursday after seesawing between positive and negative territory for most of the session. Stocks accelerated lower on the close, finishing at the worst levels of the session. Sectors were mixed, with the defensive sectors, consumer staples, and utilities buoying the market.  Energy and materials were the worst performers. US GDP for the Q4 was released, showing a better than expected results. Manufacturing was also better than expected while jobless claims rose more than forecast. Retail earnings continued to be released. After the closing bell Nordstrum missed on the top and bottom line but gave better than expected guidance. All of the major averages continue to trade sideways. The VIX volatility index moved higher, but continues to trade below 15%, reflecting complacent investors.

US GDP Rose More than Expected

U.S. GDP increased more than expected rising 2.6% according to a first estimate from the Commerce Department. Economists had expected a gain of 2.2% after a 3.4 percent rise in the third quarter. Growth was helped by a 2.8% rise in consumer spending along with increased nonresidential fixed investment, exports, private inventory investment, and federal government spending. Weakness in residential fixed investment, which fell 3.5%, and state and local government spending was the largest drag on GDP.

The gross private domestic investment gain slowed to 4.6% in the quarter after a robust 15.2% rise in the previous period. Exports rose 1.6% in the quarter, reversing a 4.9% decline in the previous quarter, while imports increased by 2.7%. For 2018, GDP was up by 2.9% just short of the target of the Trump administration. The 2.9% print was the high point for the Obama administration as well. It had yet to be determined whether the tax cuts will further boost GDP in the United States.

Jobless Claims Rose More than Expected

US jobless claims rose 8,000 225,000 for the week ended February 23, according to the Labor Department. Data for the prior week were revised to show 1,000 more applications received than previously reported. The Labor Department said no states were estimated. Economists had expected claims to rise to 220,000 in the latest week. The four-week moving average of initial claims, fell 7,000 to 229,000 last week. The claims report showed the number of people receiving benefits after an initial week increased 79,000 to 1.81 million for the week ended February 16, the highest level since April 2018.

Chicago Purchasing Managers Index Surges

The Chicago PMI surged 8 points to 64.7 in February, according to the ISM. That’s the largest monthly rise since February 2017. The new orders component rose 15.2 points. This points to an increase in manufacturing in the coming months. The Chicago PMI is generally a considered a solid barometer of the Nation PMI number which will be released by the Institute of Supply Management on Friday.