U.S. Economic Growth Estimate Lowered, Stocks Struggle

Nichole Harper
27 Feb, 2015
New York City

U.S. stocks struggled to advance after economic growth in the final quarter was revised down to 2.2% from the previous estimate of 2.6%. For all of 2014, economic expansion accelerated to 2.4% from 2.2% in 2013. J.C. Penney plunged 6% on weaker outlook.

[R]9:50 AM New York – U.S. stocks struggled to advance after economic growth in the final quarter was revised down to 2.2% from the previous estimate of 2.6%. For all of 2014, economic expansion still accelerated to 2.4% from 2.2% in 2013. J.C. Penney plunged 6% on weaker outlook.[/R]

Stocks on Wall Street took in strides the latest downward revision to the economic growth in the final quarter of last year.

In the second estimate, the U.S. economic growth was revised down to 2.2% in the fourth-quarter from an initial estimate of 2.6%. Final estimate on the economic growth will be released in March.

Economy had expanded in the third-quarter at 5% annual pace.

The latest downward revision was led by the decrease in estimate of the inventory in the final three months of the year.

Despite the latest downward revision, in 2014 the U.S. economy expanded at a faster pace of 2.4% from 2.2% increase in 2013.

Consumer spending led the increase with a growth of 2.5%, the fastest increase since 2006.

On Wall Street trading, Tollbooth Strategy Index gained 0.2% or 23.19 to 10,748.39.

S&P 500 index slid 0.15 or 0.01% to 2,110.61 and the Nasdaq Composite Index fell 5.68 or 0.1% to 4,981.83.

Crude oil fell $1.35 a barrel to $48.46 and gold fell $5.90 to $1,199 an ounce.

U.S. Movers


J C Penney Company Inc ((JCP)) plunged 6.6% or 60 cents to $8.52 after the department store operator reported total sales in the fourth-quarter ending in January jumped 2.9% to $3.89 billion from a year ago period. Comparable store sales in the quarter climbed 4.4% and online sales soared 12.5% to $428 million.

Net in the quarter swung to a loss of $59 million or 19 cents per diluted share compared to profit of $35 million or 11 cents from the same quarter last year.

Ross Stores, Inc ((ROST)) surged 6.7% or $6.52 to $105.68 after the off-price apparel and home fashion retailer said total sales in the fourth-quarter ending in January climbed 11% to $3.03 billion from a year ago period. Comparable store sales in the quarter jumped 6%.

Net income in the quarter climbed 14% to $248.5 million or $1.20 per diluted share compared to $217.95 million or $1.02 from the same quarter last year.

The retailer forecasted comparable store sales to increase between 2% and 3% and earnings per share in the range of $1.21 to $1.26, up from $1.15 for the same period last year.

For the fiscal 2015, the company forecasted same store sales to increased 1% to 2% and earnings per share between $4.60 and $4.80, up from $4.42 of fiscal 2014.

European Markets

In London trading, FTSE 100 index edged up 4.44 to 6,954.17 and in Frankfurt the DAX index rose 0.1% or 10.05 to 11,338.23.

In Paris, CAC 40 index gained 0.3% or 13.26 to 4,923.88.

Airbus Group NV surged 7.5% to €55.47 after the France-based aerospace and defense group reported revenues in the year ending in December jump 5% to €60.71 billion from €57.57 billion a year ago period.

Net income in the year soared 59% from a year ago to €2.34 billion compared to €1.47 billion and diluted earnings per share climbed to €2.99 from €1.86.

The aerospace and defense group forecasted earnings per share, dividend per share and revenues to increase in 2015. Airbus estimated slight increase in EBIT before one-off in fiscal 2015.

BASF SE dropped 2.1% to €85.16 after the Germany-based chemicals maker said revenues in the fourth-quarter ending in December slid 0.6% to €18.05 billion from €18.42 billion a year ago period.

Net income in the year surged 25.7% from a year ago to €1.42 billion compared to €1.13 billion and diluted earnings per share jumped to €1.54 from €1.23.

Asian Markets

Nikkei in Japan extended to another 15-year high as investors digested several economic reports.

Auto production declined for the seventh month in a row and housing starts fell for the eleventh month. Also, the latest measure of inflation showed a decline and jobless rate was unchanged.

Investors focused on the barrage of domestic economic news and auto production declined for the seventh month in a row and housing starts declined for the eleventh month in a row.

In addition, the latest measure of jobless rate was nearly unchanged and critically watched inflation index declined in January despite the efforts from the Bank of Japan to revive inflation.

Seasonally adjusted unemployment rate in January climbed 3.6% and unchanged from December. The number of unemployed persons in January was 2.31 million, a decline of 70,000 or 2.9% from a year ago month, the Ministry of Internal Affairs and Communications reported today.

In a separate report, the ministry said consumer price index in January declined to 103.1, 0.2% decrease from the previous month but jumped 2.4% from a year ago month.

The same department reported average household spending in January dropped 5.1% to 289,847 yen followed by 3.4% contracted in December.

The department added average monthly income per household slipped 2.3% to 440,226 yen and monthly consumption expenditures declined 4.3% to 320,674 yen from a year ago month.

Total value of retail sales in January dropped 2% to 11.49 trillion yen followed by 0.1% increase in December. On a seasonally adjusted retail sales slipped 1.3%, the Ministry of Economy, Trade and Industry said.

Industrial production in January climbed 4% following the 0.8% increase in December but declined 2.6% from a year ago month, the Ministry of Economy, Trade and Industry said today.

Seasonally adjusted shipments in January increased 5.8% and seasonally adjusted inventories in the month decreased 0.6% from December.

Automobile production in January declined 9.7% to 777,656 units from 860,854 units a year ago month, the Japan Automobile Manufactures Association announced.

The monthly production declined for the seventh month in a row.

Motorcycle production in January plunged 13.1% to 49,675 units from 57,176 units a year ago period.

The department added January passenger cars sales in domestic market tumbled 20.7% to 344,040 units and sales of trucks in the month dropped 8.6% to 56,590 units.

Total vehicles sales in the month declined 19.1% to 401,366 units.

Total export in January climbed 4.6% to 341,872 units.

Housing starts in January declined 13% followed by 14.7% plunge in December, the Ministry of Land, Infrastructure, Transport and Tourism said.

Housing starts declined for the eleventh month in a row.

The Nikkei 225 Stock Average edged up 12.15 to 18,797.94 and the broader Topix index rose 2.17 to 1,523.85.

For the week Nikkei 225 climbed 2.5% and for the month soared 5.8%.

The yen traded eased to 119.25 against one dollar.

Market indexes in Mumbai soared a day before union government budget as expectations ran high.

Stocks were under pressure after the release of rail budget that kicked off the largest five-year investment program in the fourth-largest rail network in the world.

The $137 billion investment program will focus on modernizing network, improving facilities at stations and relieving freight network congestion.

Indian rupee rose 8 paisa to 61.83 against one dollar.

The Sensex Index climbed 473.47 or 1.7% to close at 29,220.12. The CNX Nifty jumped 160.75 or 1.9% to 8,844.60.

For the week the Sensex index slid 0.03% and for the month dropped 1.2%. For the week the CNX Nifty rose 0.2% and for the month slipped 0.7%.