Sluggish Earnings Forecasts Put Markets to the Next Test

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1. Sluggish earnings forecasts put markets to the next test

The U.S. economy grew at its slowest pace since 2011 last quarter, according to government data released Thursday. Economists had expected gross domestic product (GDP) to increase at a 2% annual rate in the third quarter, down from a 4.2% gain in the second quarter.

2. Stocks fall after weak GDP report

Stocks fell sharply following the release of the disappointing economic data, with the Dow Jones Industrial Average falling nearly 1%, while the S&P 500 dropped 0.9%.

3. Market volatility could rise if Fed raises rates

In the wake of the weaker-than-expected GDP numbers, investors were concerned about what might happen if the Federal Reserve raised interest rates again. If the Fed does raise rates, it would likely mean higher borrowing costs for consumers and businesses. That could hurt consumer spending and corporate profits.

4. Investors eye Fed’s Jackson Hole speech

Investors will be watching closely to see how the Fed reacts to the disappointing GDP figures. In his first major policy address since taking over as chairman, Jerome Powell will speak Friday at the annual meeting of central bankers in Wyoming. He’ll have to walk a fine line between reassuring markets that he won’t let inflation get out of control and avoiding any hint of tightening monetary policy.

5. Economic reports weigh on stocks ahead of Labor Day

Other economic news on tap includes September retail sales, housing starts and building permits, industrial production, and trade balance.

6. Apple shares drop after iPhone X launch

Apple shares fell after the company announced lower than expected revenue for the holiday quarter. Apple said it sold 74 million iPhones in the three months ending Sept. 30, compared with analyst expectations of 78 million. Revenue was $53 billion, below estimates of $55 billion.

7. Amazon shares tumble after quarterly profit misses

Amazon shares tumbled after the online retailer reported a narrower-than-expected loss for the latest quarter. The company posted net income of $2.2 billion, or $1.05 per share, down from $3.8 billion, or $1.85 per share, a year earlier. Analysts polled by FactSet had forecast a profit of $1.07 per share.