GDP: Putting the Energy Back in Stocks

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A better-than-expected expansion of fourth-quarter real GDP at an annual rate of 3.2 percent energized the stock market on Thursday.

The stock market shrugged off a disappointing increase in weekly initial unemployment claims as the more-important advance report on fourth-quarter GDP was better than expected. Although economists were expecting to see that real GDP expanded at an annual rate of 3.0 percent during the fourth quarter, the Bureau of Economic Analysis reported expansion at an annual rate of 3.2 percent.

The all-important personal-consumption expenditures increased 3.3 percent in the fourth quarter, compared with 2.0 percent during the third quarter. For calendar year 2013, real GDP increased by 1.9 percent, compared with 2.8 percent expansion in 2012. The decrease resulted from “negative contribution from federal government spending” (i.e. the inane austerity program, or budget sequester, which will not be a factor in 2014).

The Department of Labor reported that for the week ending January 25, the advance figure for initial unemployment claims rose by 19,000 to 348,000. Economists had been expecting to see 327,000 initial claims. The four-week moving average rose by 750 claims to 333,000.

The Dow Jones Industrial Average (NYSEARCA:DIA) picked up 109 points to finish Thursday’s trading session at 15,848 for a 0.70 percent advance. The S&P 500 (NYSEARCA:SPY) jumped 1.13 percent to close at 1,794 — erasing the losses experienced this week, after closing at 1,790 last Friday. The Nasdaq 100 (NASDAQ:QQQ) soared 1.86 percent, climbing back above its 50-day moving average to finish at 3,532. The Russell 2000 (NYSEARCA:IWM) soared 1.51 percent to end the day at 1,139. 

In other major markets, oil (NYSEARCA:USO) advanced 0.63 percent to close at $34.95. On London’s ICE Futures Europe Exchange, March futures for Brent crude oil declined 09 cents (0.08 percent) to $107.15/bbl. (NYSEARCA:BNO). April gold futures declined $18.90 (1.50 percent) to $1,243.30 per ounce (NYSEARCA:GLD).

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