The Good: U.S. economic data released this past week were almost uniformly good, indeed, better than expected in most cases. The Atlanta Federal Reserve’s “GDPNow” rules-based GDP forecaster has bent up from an early August indication of 2.6% GDP growth for the third quarter of 2014 to more than 3.0% last week, largely on improvements in wholesale and international trade, industrial production and housing starts.
Recurring profit taking in some of the stock market’s big winners from 2013 and earlier this year took most U.S. market indexes down 2%-3% last week. For NASDAQ, which dipped below 4000 Friday for the first time in two months, prices are off 8% from last month’s high, the most in 16 months. The S&P 500 is down 4% from its April 2 all-time peak. In bonds, the Treasury yield fell below 3.5% for the first time since last July. Follow the link below to our weekly review.
Sharply lower bond yields, an easing of the Chinese liquidity squeeze and the promise of continued monetary accommodation in Europe helped raised stock prices globally Wednesday despite a steep downward revision in U.S. GDP growth. [Read more…]