Stocks didn't take the most conventional path to gains Thursday, but they climbed the ladder nonetheless as the U.S. economy continued to flex its recovering muscles.
The Commerce Department revealed that U.S. GDP grew by a seasonally adjusted annual rate of 6.4% during the first quarter of 2021, exceeding Kiplinger's forecast for 5.5% though coming in a little shy of consensus estimates for 6.7%.
"The report points to ongoing recovery and keeps the U.S. economy on track to recover to its pre-pandemic level by Q2 '21," says Barclays economist Pooja Sriram.
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"Personal consumption spending remained the main driver of growth, as we had anticipated," she says. "Private inventory investment subtracted from growth, reflecting a draw-down in stocks as consumption surged, while net exports also made a negative contribution amid stronger imports."
Adding fuel to the fire was a modest decline in weekly unemployment filings, to 553,000 from 570,000 the week prior.
Stocks spiked at the open Thursday, declined through midday, then recovered throughout the rest of the afternoon. Facebook (FB, +7.3%) helped power the S&P 500 (+0.7% to 4,211) to a fresh all-time high after announcing a 48% jump in Q1 revenues and a wide earnings beat. Apple (AAPL, -0.1%) reported a monster quarter, too, with sales up 54% and profits well ahead of analyst projections, but its advance was more muted thanks to a warning that the global chip shortage could dent current-quarter results.
The Dow Jones Industrial Average (+0.7% to 34,060) finished with a solid gain, while the Nasdaq Composite (+0.2% to 14,082) closed modestly higher.
Other action in the stock market today:
- Automaker Ford (F, -9.6%) reported better-than-expected profit and revenue in its first quarter, but it warned the global chip shortage could drag on full-year earnings.
- Disappointing guidance weighed on eBay (EBAY, -10.0%), too, even as the company beat top- and bottom-line estimates for Q1.
- In non-earnings news, Uber Technologies (UBER, -6.0%) and Lyft (LYFT, -9.9%) sold off dramatically today. Weighing on the ridesharing names were comments made by U.S. Labor Secretary Marty Walsh, who told Reuters that "gig workers should be classified as employees."
- The small-cap Russell 2000 finished 0.4% in the red to 2,295.
- U.S. crude oil futures spiked 1.8% higher to settle at $65.01 per barrel after today's economic data supported signs of an improving U.S. economy.
- Gold futures fell 0.3% to finish at $1,768.30 per ounce.
- The CBOE Volatility Index (VIX) climbed 1.0% to 17,46.
- Bitcoin prices plunged 4.5% to $55,470. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)
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