U.S. Stocks Advance, Smaller Q2 GDP Contraction

Barry Adams
25 Aug, 2022
New York City

Stocks on Wall Street opened higher and the GDP contraction in the second quarter was revised. 

U.S. economic growth in the second quarter was revised to a smaller decline than initially estimated, according to a report released by the BEA on Thursday. 

GDP contracted at 0.6% in the second quarter compared to the previous estimate of a decline of 0.9% released last month by the Bureau of Economic Analysis. 

However, the smaller contraction data was also accompanied by higher inflation in the quarter. The price index for gross domestic purchase increased to 8.4% from the previous estimate of 8.2%. 

In a separate report, jobless claims held nearly steady near multi-decade low.  

Initial claims of jobless benefits were 243,000 for the week ended Aug 20, a decline of 2,000 from the previous, the Labor Department reported Thursday. 

The S&P 500 index increased .06% to 4,165.63 and the Nasdaq Composite index added 0.9% to 12,532.07.  

Futures of crude oil decreased 22 cents to $94.67 a barrel and natural gas decreased 9 cents to $9.24 a thermal unit. 

The yield on 10-year Treasury notes held stable at 3.10% and 2-year notes were nearly unchanged at 3.38%. 

Peloton Interactive plunged 20.2% to $10.76 after the fitness equipment maker reported a larger-than-expected quarterly loss and said business is likely to remain challenging in 2023. 

Dollar General Corp was nearly unchanged at $247.09 after the deep discount retailer reported stronger quarterly results. 

Revenues in the second quarter fiscal year 2022 ending in July increased 9.0% to $9.4 billion on a comparable same store sales rise of 4.6%. 

Net income in the second quarter increased 6.4% to $678 million from $637 million a year ago. Diluted earnings per share rose to $2.98 from $2.69 a year ago. 

Total merchandise inventories rose 25.1% to $6.9 billion compared to $5.3 billion as of July 30, 2021.

Abercrombie & Fitch declined 4.1% to $17.87 after the apparel retailer posted an unexpected quarterly loss. 

The apparel retailer said second quarter revenues declined 7% to $805 million and gross margin rate declined 730 basis points to 57.9%, driven by higher product costs and commodity inflation partially offset by higher average unit retail at Abercrombie.

In the second quarter, the retailer swung to a loss of $14.7 million or 33 cents a diluted earnings per share from a profit of $110.5 million or $1.33 a share a year ago. 

Abercrombie & Fitch lowered its net sales outlook to be down mid-single-digits from $3.7 billion in 2021 compared to previous outlook of flat to up 2%. 

Victoria's Secret & Company increased 2.6% to $39.32 after the intimate apparel retailer said second quarter sales declined 5.7% to $1.5 billion from $1.61 billion a year ago.  

Second quarter net income declined to $70 million or $0.83 a diluted share compared to $151 million or $1.71 a share a year ago.  

Same store sales in the second quarter declined 7% compared to an increase of 16% in the quarter a year ago.