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It’s been a whirlwind week in the markets, with full acceleration of Q1 earnings season and a healthy dollop of economic reads to inform investors going forward. This morning we pull back a tad, but still get our first look at Q1 Gross Domestic Product (GDP): 2.3%. This is better than the expected range of 1.8%-2.0%, though down from Q4’s final read of 2.9%.
Keep in mind Q1 earnings are traditionally softer by nature: a year ago, the initial report for Q1 growth was 0.7% (eventually revised up to 1.2%). Winter weather and a slowing down of consumption from the previous holiday season are two cyclical explanations for this. This year, we see an initial economic boost as corporations have had their taxes radically lowered; this has for sure found its way into today’s Q1 GDP headline number, though it’s up for debate exactly how much.
The good news is, keeping with the cyclical reasoning another moment, Q2 GDP can be expected to deliver a bit of a pop as it did in Q2 2017 (+3.1%) and in years previous to that. So with a near 2 1/2 figure on Q1’s initial read, it’s not at all unreasonable to see a strong 3-handle on Q2 GDP when the numbers come out next quarter. But let’s not get ahead of ourselves: there are still two more bites at the Q1 apple over the next couple months, and we may yet see this number crank a higher, depending.
Also good news from this headline this morning is that the number is not too high — 3.5% or 4% may have had a chilling effect on the markets, as investors would have seen a rapid heating up of the economy leading to higher interest rates to absorb increasing inflation, etc. But nobody is saying that about a 2.3% figure; in fact, as we’ve seen plenty of Goldilocks metrics in our current economy, from jobs to wages to global growth, today’s GDP number fits this narrative quite well itself.
Consumption was up 1.1% in Q1, down from the holiday-shopping-heavy 4% in Q4. Pricing came in at 2.0%, down a tad from the expected 2.2% and 2.3% in the final read for Q4. Personal Consumption Expenditures (PCE) reached notably higher than expected — +2.5% from the expected 1.9%, and this does point to a heating up of the economy. But again, this is not reflective of an economy in full boil, more like a slightly enhanced toasting effect.
Q1 earnings, on the other hand, are radiating some real heat these days, led by Amazon’s (AMZN - Free Report) phenomenal Q1 report released after the bell Thursday. The company trounced every metric estimate, the way an upcoming growth company might perform, not a three-quarters of a billion-dollar market-cap behemoth. The Zacks Rank #1 (Strong Buy) company is poised to open Friday at all-time highs, with nothing realistic standing in its way. Amazon’s Q1 earnings report is something that will likely be studied in business schools for years to come. For more on AMZN’s earnings, click here.
Ahead of Friday’s opening bell Exxon Mobil (XOM - Free Report) reported Q1 earnings, missing the Zacks consensus estimate on the bottom line but beating on the top. Earnings of $1.09 per share was 5 cents short, while $68.2 billion in revenues surpassed expectations by roughly $2 billion. Production was down year over year for both oil and natural gas, and shares are selling off around 2.3% in today’s pre-market. For more on XOM’s earnings, click here.
Dominion Energy (D - Free Report) , another nat-gas major supplier, beat expectations on both top and bottom lines: $1.14 per share outpaced the $1.03 in the Zacks consensus, whereas $3,466 million in quarterly revenues leapt past the $3,355 million analysts had been looking for. For more on D’s earnings, click here.
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GDP, Earnings Remained In Focus
It’s been a whirlwind week in the markets, with full acceleration of Q1 earnings season and a healthy dollop of economic reads to inform investors going forward. This morning we pull back a tad, but still get our first look at Q1 Gross Domestic Product (GDP): 2.3%. This is better than the expected range of 1.8%-2.0%, though down from Q4’s final read of 2.9%.
Keep in mind Q1 earnings are traditionally softer by nature: a year ago, the initial report for Q1 growth was 0.7% (eventually revised up to 1.2%). Winter weather and a slowing down of consumption from the previous holiday season are two cyclical explanations for this. This year, we see an initial economic boost as corporations have had their taxes radically lowered; this has for sure found its way into today’s Q1 GDP headline number, though it’s up for debate exactly how much.
The good news is, keeping with the cyclical reasoning another moment, Q2 GDP can be expected to deliver a bit of a pop as it did in Q2 2017 (+3.1%) and in years previous to that. So with a near 2 1/2 figure on Q1’s initial read, it’s not at all unreasonable to see a strong 3-handle on Q2 GDP when the numbers come out next quarter. But let’s not get ahead of ourselves: there are still two more bites at the Q1 apple over the next couple months, and we may yet see this number crank a higher, depending.
Also good news from this headline this morning is that the number is not too high — 3.5% or 4% may have had a chilling effect on the markets, as investors would have seen a rapid heating up of the economy leading to higher interest rates to absorb increasing inflation, etc. But nobody is saying that about a 2.3% figure; in fact, as we’ve seen plenty of Goldilocks metrics in our current economy, from jobs to wages to global growth, today’s GDP number fits this narrative quite well itself.
Consumption was up 1.1% in Q1, down from the holiday-shopping-heavy 4% in Q4. Pricing came in at 2.0%, down a tad from the expected 2.2% and 2.3% in the final read for Q4. Personal Consumption Expenditures (PCE) reached notably higher than expected — +2.5% from the expected 1.9%, and this does point to a heating up of the economy. But again, this is not reflective of an economy in full boil, more like a slightly enhanced toasting effect.
Q1 earnings, on the other hand, are radiating some real heat these days, led by Amazon’s (AMZN - Free Report) phenomenal Q1 report released after the bell Thursday. The company trounced every metric estimate, the way an upcoming growth company might perform, not a three-quarters of a billion-dollar market-cap behemoth. The Zacks Rank #1 (Strong Buy) company is poised to open Friday at all-time highs, with nothing realistic standing in its way. Amazon’s Q1 earnings report is something that will likely be studied in business schools for years to come. For more on AMZN’s earnings, click here.
Ahead of Friday’s opening bell Exxon Mobil (XOM - Free Report) reported Q1 earnings, missing the Zacks consensus estimate on the bottom line but beating on the top. Earnings of $1.09 per share was 5 cents short, while $68.2 billion in revenues surpassed expectations by roughly $2 billion. Production was down year over year for both oil and natural gas, and shares are selling off around 2.3% in today’s pre-market. For more on XOM’s earnings, click here.
Dominion Energy (D - Free Report) , another nat-gas major supplier, beat expectations on both top and bottom lines: $1.14 per share outpaced the $1.03 in the Zacks consensus, whereas $3,466 million in quarterly revenues leapt past the $3,355 million analysts had been looking for. For more on D’s earnings, click here.