Stocks close mixed despite strong economic data
US stocks started the trading session on a positive note, with the Dow rising triple digits and hitting an all-time high on the heels of a better than expected GDP report. Investors still needed to focus on the Fed decision on interest rates, but most investors expected the Fed to keep the language simple and punted any potential changes to their September meeting.
Before the opening bell the Commerce Department released its first estimate of 2nd quarter GDP. The 1.7% print was much better than the 1% expected by economists. Many had even predicted growth to come in closer to .5%. Personal consumption, which measures consumer demand, came in at 1.8% which was in line with expected. Government spending and business investments were the catalyst for the rise. The price deflator, which is a measure of inflation, came in at .7%, compared to the 1.7% from the first quarter. Offsetting the climb in growth was the revision to the first quarter estimate. Final GDP for the 1st quarter GDP was revised lower to 1.1%, from the estimate of 1.7%.
The Federal Reserve kept interest rates unchanged, and left the language with respect to their bond purchase program unchanged. The dovish stance will likely keep markets relatively calm, as tension builds toward the Fed September meeting. Friday’s non-farm payroll report will be the start of the process where each data point is evaluated toward a potential tapering.
The S&P 500 closed lower, as investors took profits at month end. Momentum remains negative as the MACD generated a sell signal yesterday, as the spread (12-day moving average minus the 26-day moving average) crossed below the 9-day moving average of the spread. The RSI is printing near 61 which is on the high end of the neutral range.
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