US releases economic growth for first quarter as stocks rally stumbles

The first reading of growth in the US economy and central bank statements in Japan and Europe head the list of market-related news this week.

The US Bureau of Economic Analysis releases first-quarter economic growth on Friday, following the Commerce Department’s Thursday releases on March data on orders for long-lasting factory goods.

In February, factory orders rose at the best pace in eight months, in part because of an uptick in business investment, which hit the highest level since 2014.

Economists surveyed by the Wall Street Journal expect a 1.6% increase in orders for March.

Last year’s fourth-quarter gross domestic product rose at a 2.9% annual rate, exceeding economists' expectations at the time of the third revision.

Growth in this year’s first quarter is expected to come in weaker after months of soft consumer spending. The Wall Street Journal survey projects a 1.8% GDP growth figure for the quarter.

Stocks tumble on Wall Street
US stocks tumbled at the end of last week, wiping out much of the gains they had accumulated during a string of upbeat corporate earnings reports.

The Dow Jones Industrials Average fell 201.95 points, or 0.8%, to 24,462.94 for its third straight daily loss. The S&P 500 lost  0.9% to 2670.14 and the Nasdaq Composite lost 1.3% to 7146.13.

All three rose for the week, with the Dow up 0.4%, the S&P 500 adding 0.5% and Nasdaq advancing 0.6%.

To some, the slowdown in the stock rally this year shows investors have already largely priced in solid earnings growth.

“Now we’re in this sixth quarter in a row of strong earnings, and there’s an expectation built in,” says Ernie Cecilia, chief investment officer at Bryn Mawr Trust.

 “The risks are that earnings do not come in according to expectations, particularly in higher-valued areas of the market.”

The selling of US government bonds accelerated as inflation expectations picked up, sending the yield on the benchmark 10-year Treasury note to 2.949% – the highest closing since January 2014 – compared with 2.828% a week earlier. Friday.

That helped lift shares of financial institutions, whose net interest margins tend to rise with interest rates. The S&P 500 financial sector posted a 1.6% weekly gain, with American Express and Charles Schwab both up more than 7% than a week ago.

Slowdown in Eurozone
In Europe, the UK’s FTSE 100 index added 0.5% as its exporters received a bump from a slide in the pound. The Stoxx 600 eased 0.03%, France’s CAC 40 rose 0.4% and Germany’s DAX was down 0.2%.

Signs of a slowdown in the eurozone economy will probably play a central part in the European Central Bank’s discussions ahead of its policy announcement on Thursday.

IHS Markit ’s composite Purchasing Managers Index, due on Monday, is a timely measure of activity, and economists expect that to point to a further easing of momentum in April. The measure is seen falling to 54.8 from 55.2 in March.

The Bank of Japan’s policy statement and quarterly outlook report, due on Friday, could indicate when it might scale back its aggressive easing policy.

In early March, the central bank left its policy unchanged but earlier in the year Bank of Japan governor Haruhiko Kuroda said for the first time the central bank would consider tightening in the year starting in April 2019.