U.S. Averages Steady Treasury Yields, Ease After GDP Growth Accelerates In Second Quarter

Barry Adams
25 Jul, 2024
New York City

U.S. major averages were steady after investors reviewed the latest update on gross domestic product and additional earnings releases. 

The S&P 500 index and the Nasdaq Composite were nearly unchanged in early trading a day after a sharp sell-off in mega-cap tech stocks following disappointing earnings from Tesla and Alphabet. 

Ford Motor dropped as much as 15% after the vehicle maker's earnings were far lower than expectations set by some analysts; American Airlines dived 3% after weaker-than-expected earnings; and Chipotle Mexican Grill fell 3% despite the restaurant company reporting better-than-expected results. 

Investors also reviewed the update on the second-quarter GDP report, which showed a significant rebound from the first quarter. 

Gross domestic product expanded at an annual rate of 2.8% in the second quarter, faster than the annual pace of 1.4% in the first quarter, the U.S. Bureau of Economic Analysis showed Thursday. 

Consumer spending accelerated to 2.3% from 1.5%, and the increase in private inventories added 0.82 percentage points to the economic growth in the quarter. Nonresidential fixed investment accelerated to 5.2% from 4.4%. 

On the other hand, residential investment contracted for the first time in a year by 1.4% from a rise of 16%, and international trade continued to drag on economic growth after imports accelerated to 6.9% from 6.1%, faster than the increase in exports to 2% from 1.6%. 

New orders for durable goods declined 6.6% from the previous month in June to $264.5 billion, after rising for four months in a row, the U.S. Census Bureau reported Thursday. 

 

U.S. Indexes and Treasury Yields

The S&P 500 index increased 0.4% to 5,481.04, the Nasdaq Composite fell 0.1% to 17,206.36, and the Russell 2000 index fell 0.1% to 2,205.98.

The yield on 2-year Treasury notes edged higher to 4.43%, 10-year Treasury notes increased to 4.2%, and 30-year Treasury bonds edged higher to 4.52%.

WTI crude oil decreased $0.76 to $76.80 a barrel, and natural gas prices edged down 2 cents to $2.09 a thermal unit.

Gold decreased by $28.77 to $2,370.31 an ounce, and silver declined by $1.23 to $27.62. 

The dollar index, which weighs the US currency against a basket of foreign currencies, edged lower to 104.42.

 

U.S. Stock Movers 

Southwest Airlines increased 2.4% to $27.25 after the regional airline reported better-than-expected second-quarter results. 

Total operating revenue increased 4.5% to $7.4 billion from $7.0 billion, net income plunged 46% to $367 million from $683 million, and diluted earnings per share dropped to 58 cents from $1.08 a year ago. 

The airline warned that its revenue per average seat mile may fall and nonfuel costs may jump by as much as 13% in the current quarter from a year ago. 

American Airlines Group rose 1.4% to $10.32 after the international carrier issued a cautious outlook for the current quarter, citing lower fares because of overcapacity. 

Total operating revenue in the second quarter increased 2% to $14.3 billion from $14.1 billion, net income plunged 46% to $717 million from $1.3 billion, and diluted earnings per share fell to $1.01 from $1.88 a year ago. 

The company guided diluted earnings per share in the third quarter to be breakeven and in the full year to range between 70 cents and $1.30. 

Chipotle Mexican Grill decreased 2% to $50.77 after the restaurant chain operator reported 

Revenue in the quarter increased 18% to $3.0 billion from $2.5 billion, net income advanced to $455.6 million from $341.7 million, and diluted earnings per share rose 32% to 33 cents from 25 cents a year ago. 

Comparable same-store sales increased 11.1%, and the company opened 52 new stores in 46 locations and one international licensed restaurant. 

The company reiterated full-year comparable restaurant same-store sales to increase in the mid- to high-single-digit range and open between 285 and 315 stores. 

During the second quarter, the company repurchased $151.4 million of stock at an average price per share of $63.52. 

As of June 30, $647.7 million was available under share repurchase authorizations, including an additional $400 million in authorized repurchases approved by the Board on June 5.