US Stock Market Overview – Stocks Drop, Despite Robust Productivity Gains

Stock prices were on the defensive for most of the trading session, as the 3-major average all closed in the red. Stocks have not shaken off the mixed message sent by the Federal Reserve on Wednesday. While the statement was more dovish than expected, the press conference was the opposite. US jobless claims came out weaker than expected, but US productivity came in at the fastest pace in 4-years. Sectors were mixed, with energy leading the way lower as crude oil dropped more than 3%, in the wake of Wednesday’s larger than expected build in crude oil inventories. Health care stocks bucked the trend and was the best performing sector in the S&P 500 index. Apple shares moved lower, after rising on Wednesday following better than expected earnings

US Productivity Comes in Stronger than Expected

The Labor Department on Thursday reported that US worker productivity increased at its fastest pace in more than four years in the Q1, depressing labor costs. The Labor Department said that nonfarm productivity, which measures hourly output per worker, increased at a 3.6% annualized rate in the last quarter. That was the strongest pace since the third quarter of 2014. Data for the fourth quarter was revised lower to show productivity increasing by only 1.3% instead of the previously reported 1.9% rate. Expectations were for productivity to rise by 2.2% rate. Productivity increased 2.4% year over year compared to the Q1 of 2018. The strong pace of productivity suppressed growth in labor costs, a potential boost to corporate profits. Unit labor costs, the price of labor per single unit of output, fell at a 0.9% rate in the first quarter after increasing at a 2.5% rate in the prior quarter.

Jobless Claims Where Unchanged

US Jobless claims were flat at 230,000 for the week ended April 27, according to the Labor Department. Claims surged 37,000 in the prior week, which was the largest rise since September 2017. Expectations were for claims to fall to 215,000 in the latest week.

Facebook is Told to Add More Oversight

Federal regulators are forcing Facebook Inc. to accept significant changes to its corporate governance as part of a settlement of user privacy concerns, with reorganization of the company’s board. The changes being negotiated between the Federal Trade Commission and Facebook would alter the board’s structure. The aim would be to put privacy on par with the board’s other responsibilities.

Tesla is Looking to Raise Cash

Tesla is looking to raise as much as $2.3 billion through a bond and stock sale after the electric-car maker reported a steep quarterly loss last week that heightened concerns about its dwindling reserves of cash. The company is likely to try to sell more bonds than cash given the low level of interest rates, and its ability to borrow using its stock price.