U.S. Stocks Set To Open Higher After Disappointing GDP Report

Published: Apr 29, 2020, 12:56 UTC•2min read

S&P 500 futures are pointing to a higher open as investors and traders believe that bad GDP numbers will push the Fed to announce more stimulus.

Q1 GDP Growth Rate Is -4.8%

S&P 500 futures are pointing to a higher open in premarket trading following the release of the first-quarter GDP data. First-quarter GDP declined by 4.8% while the analyst consensus called for a decline of 4%.

Currently, the market continues to follow the mantra “bad news is good news” as every additional bad news is interpreted as a sign of upcoming additional monetary stimulus from the Fed and the government.

In this light, it’s not surprising that S&P 500 futures shot up immediately after the release of the disappointing GDP data.

Today, investors and traders will also have a chance to evaluate new data on Pending Home Sales for March, which are expected to fall by 10% month-over-month.

Fed Interest Rate Announcement

Later in the day, the U.S. Federal Reserve will announce its interest rate decison. The rate is expected to stay unchanged since the another rate cut will take it to the negative territory which could damage the stability of the U.S. dollar and the U.S. debt.

In this environment, the market will focus on the comments of Jerome Powell, searching for hints of additional stimulus. The Fed has already rolled out unprecedented measures, and it’s not clear what else can be done to improve the situation.

However, the market is clearly betting that more stimulus will be announced as the crisis progresses since it takes bad news as a catalyst for a rally. In all likelihood, the Fed will try not to disappoint market participants and ensure that the current market optimism stays intact.

Oil Gains Ground Following Inventory Data

API Crude Oil Stock Change showed that inventories increased by 10 million barrels, which was less than analysts expected. WTI oil is using this data as an excuse for a rally and the front-month June 2020 contract is currently headed towards $15.00.

Big oil stocks have held fairly well during the recent oil price downside and were able to rebound together with the market. Today, they are poised to contribute to additional market upside following the release of GDP numbers.

Later in the day, traders will get a chance to evaluate the EIA Crude Oil Stocks Change, which could have a very material impact on oil price dynamics.