Midday Update: GDP Spooks Wall Street On Fears of Less Accommodative Fed

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Wall Street reversed course soon after the open Wednesday, turning south after the Bureau of Economic Analysis reported its initial estimate for Q2 gross domestic product, along with rising inflationary pressures fueled concerns the Federal Reserve will increase short-term interest rates sooner than expected. While the above-consensus 4.0% rise in Q2 GDP initially added to pre-market gains, investor sentiment quickly deteriorated after the opening bell when the full implications of strong growth and higher price pressures were digested.

The Dow Jones Industrial Average and S&P 500 were both in the red today although the Nasdaq Composite index continues to outperform thanks to stellar earnings results by Twitter ( TWTR ) and Amgen ( AMGN ), supporting significant gains in social-media and biotech stocks, respectively.

Wednesday's economic calendar kicked off with Automated Data Processing ( ADP ) reporting private employers added 218,000 workers in July. Although that trailed the consensus estimate for 235,000 new jobs, the data still was considered market-friendly because it marked the fourth straight month of above-200,000 growth.

But the headline event today was the first read on Q2 GDP. After a dismal Q1 where the U.S. ecomony contracted 2.1%, the Street was expecting a 3.1% growth rate and instead got a 4.0% rise. Unfortunately, coupled with a 2.0% increase in the price index also reported today, many market participants are worrying the Fed may be moving too slow in raising short-term rates. Although the Federal Open Markets Committee is not expected to do more today than shave another $10 billion off monthly asset purchases, investors will try to glean any hints that today's data has altered the Fed bias.

In Europe, equity markets were defensive on the combination of disappointing Q2 corporate earnings, the fall-out from Russian sanctions and deflationary pressures among EU member nations. All the major indices closed in the red, corresponding with a 9-month low in the euro versus the dollar.

Crude oil was down $0.04 to $100.92 per barrel. Natural gas was down $0.06 to $3.77 per 1 million BTU. Gold was down $5.00 to $1,295.50 an ounce, while silver was unchanged at $20.59 an ounce. Copper was up $0.03 to $3.24 per pound.

Among energy ETFs, the United States Oil Fund was up 0.13% to $37.44 with the United States Natural Gas Fund was down 1.52% to $20.72. Amongst precious-metal funds, the Market Vectors Gold Miners ETF was down 2.23% to 26.21 while SPDR Gold Shares were down 0.55% to $124.50. The iShares Silver Trust was down 0.46% to $19.69.

Here's where the U.S. markets stand at mid-day:

NYSE Composite Index down 31.83 (-0.29%) to 10,904.87

Dow Jones Industrial Average down 48.74 (-0.29%) to 16,863.37

S&P 500 down 2.32 (-0.12%) to 1,967.63

Nasdaq Composite Index up 11.27 (+0.25%) to 4,453.97

GLOBAL SENTIMENT

Nikkei 225 Index up 0.18%

Hang Seng Index up 0.37%

Shanghai China Composite Index down 0.09%

FTSE 100 Index down 0.50%

CAC 40 down 1.22%

DAX down 0.62%

NYSE SECTOR INDICES

NYSE Energy Sector Index down 3.78%

NYSE Financial Sector Index up 0.05%

NYSE Healthcare Sector Index down 0.10%

UPSIDE MOVERS

(+) GFIG (+43.41%) Certain assets to be acquired by CME Group ( CME )

(+) TWTR (+20.83%) Beat earnings and revenue estimates, strong guidance

(+) GALT (+16.84%) Company responds to criticism of NASH trial

(+) ZLTQ (+31.29%) Beats earnings estimates, raises guidance

(+) EW (+10.71%) Reported better than expected Q2 results, guidance

(+) FTD (+14.29%) Will acquire Liberty Interactive's (LINTA, LINTB) floral and gifting units and announced preliminary Q2 financial results.

(+) PTRY (+16.10%) Q3 earnings beats estimates

(+) IPWR (+18.52%) Signed a multi-year purchase agreement with Sharp Electronics Corporation

(+) IPHI (+18.52%) Buying network infrastructure firm Cortina Systems for $125 mln in cash, stock

DOWNSIDE MOVERS

(-) RT (-17.02%) Disappointing Q4 results as brand transformation shows little progress

(-) PWE, PWT.TO (-17.21%) Reviewing historical financials, will restate some results

(-) DWA (-13.18%) Swings to a Q2 loss, misses earnings and revenue estimates

(-) UIHC (-15.33%) Missed Q2 revenue expectations



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Copyright (C) 2014 MTNewswires.com. All rights reserved. Unauthorized reproduction is strictly prohibited.


This article appears in: Investing , Commodities

Referenced Stocks: AMGN , ADP , CME

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