Economic Growth Slows; Jobless Claims Rise; Strategist: S&P Won’t Hit High Until 2017
Evidence Shows Slow Economic Growth (Reuters)
The economy has been showing scant signs of improvement, as a sudden spike in jobless benefits and factory activity slippage in the mid-Atlantic region accompany slow growth. Additional data suggests that there may be underlying inflation that points to weaker demand in the economy. This situation has been unexpected. While U.S. economic growth seemed promising at the beginning of the year, economists forecast that the April-June period will have lackluster growth due to Washington’s push to trim the budget deficit. “We are not rebounding from the recent swoon,” said Jacob Oubina, an economist at RBC Capital Markets in New York. “We are just muddling along.”
Jobless Claims at Six-Week High (Bloomberg)
A higher-than-expected number of Americans applied for unemployment benefits last week, marking the highest count of applications in six weeks. Officials still are uncertain what caused the sudden jump in jobless claims. “It’s possible that we could get a little bit more firing as the economy slows in the second quarter,” said Gennadiy Goldberg, a U.S. strategist at TD Securities Inc. in New York. “Volatility aside, the layoff part of the equation still looks positive. It looks more like employers aren’t very keen to fire workers but they are keen to reduce hours.”
Strategist Says S&P Won’t Hit High Until 2017 (CNBC)
Even though the S&P closed at a fresh high on Wednesday, adding momentum for global equity markets to continue improving, do not expect the index to hit the 2,500 level until 2017, Rosenblatt Securities’ Brian Reynolds predicted. “We’ve pointed out that the credit market has been acting as if the S&P is already well over 2,500, but the stock market takes longer to get where it’s going than the credit market does; this is because the equity market has traders who are trained to sell overbought rallies and buy oversold dips, unlike credit,” he said in a research note.