Q3 GDP Estimate Lowered; Home Prices Rise

123jump.com Staff
24 Nov, 2009
New York City

U.S. stocks edged lower after the third quarter economic growth estimate was lowered to 2.8% from 3.5%. Metropolitan home prices increased at a slower pace in September, fourth monthly increase in a row. The index is still 9.36% lower from a year ago.

[R]9:40 AM New York – U.S. stocks edged lower after the third quarter economic growth estimate was lowered to 2.8% from 3.5%. Metropolitan home prices increased at a slower pace in September, fourth monthly increase in a row. The index is still 9.36% lower from a year ago.[/R]

U.S. stock traded lower in the morning after the third quarter GDP estimate was lowered. Three popular benchmark indexes edged lower in the early trading.

The S&P/Case-Shiller index that tracks metropolitan home prices increased 0.27% in September after increasing at 1.13% in August. The index declined 9.36% from a year ago in September. The latest monthly increase is the fourth increase in a row.

Crude oil decreased 25 cents to $77.31 a barrel and gold edged higher $3.00 to $1,167 an ounce.

European markets traded mixed near the close.

Q3 GDP Estimates Lowered

U.S. Commerce Department lowered its estimate of economic growth in the second quarter to 2.8% from its first estimate of 3.5% increase. The second read reflects higher deficit and lower consumer spending. The final read on the second quarter growth will be released in December.

Real gross national product increased 3.8% in the period compared to a decrease of 1% in the second quarter.

The second estimate of the third quarter in GDP increase is 0.7 percentage point lower compared to the previous estimate on higher imports and downward revision of personal consumption and expenditures and nonresidential fixed investment. Higher exports contributed to the increase.

The economy appears to be struggling without the government stimulus. Motor vehicles output added 1.45 percentage points to third quarter economic growth. Corporate profits surged in the quarter by 11%, the largest quarterly increase since the first quarter of 2004.

The price index for gross domestic purchases increased 1.4% in the quarter, 0.2 percentage point less than in the advance estimate. The Fed’s preferred index if inflation had increased 0.5% in the second quarter.

Real federal government consumption expenditures and gross investment increased 8.3% in the third quarter, compared with an increase of 11.4% in the second. National defense increased 8.9%, compared with an increase of 14.0%.

Earnings Review

Hewlett-Packard Company, the hardware and technology services company said fourth quarter revenues fell 8.3% to $30.8 billion from $33.6 billion a year ago. Net income in the quarter rose 14.2% to $2.41 billion or 99 cents per diluted share compared to net income of $2.11 billion or 84 cents per share a year ago.

Net revenues for the fiscal year 2009 fell 3.2% to $114.6 billion from $118.4 billion a year ago. Net income for the year fell 8% to $7.66 billion or $3.14 per diluted share compared to net income of $8.33 billion or $3.25 per share a year ago.

Severn Trent Plc, the water supplier said first-half revenues rose 4.6% to £852.1 million from £814.3 million a year ago. Net profit for the first-half was £149.7 million or 63.4 pence per diluted share compared to net loss of £83.8 million or 35.8 pence per share a year ago.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 96.10 or 1.01% to 9,401.58, and Hang Seng index in Hong Kong decreased 348.25 or 1.53% to 22,423.14, and CSI 300 index in China lower 117.43 or 3.20% to 3,548.08. ASX 200 index in Australia decreased 32.00 or 0.68% to 4,685.00. The FTSE Bursa KL Composite index in Malaysia was higher 1.21 or 0.10% to 1,272.09.

The Kospi Index in South Korea decreased 12.63 or 0.78% to close at 1,606.42. SET index in Thailand closed lower 14.19 or 2.06% to 676.22. JSE Index in Indonesia decreased 9.53 or 0.38% to 2,471.88. The Sensex index in India decreased 49.10 or 0.29% to 17,131.08.

Europe Markets Review

In London FTSE 100 Index traded higher 10.75 or 0.20% to 5,366.25, in Paris CAC 40 Index decreased 3.38 or 0.09% to 3,809.79 and in Frankfurt DAX index traded higher 1.69 or 0.03% to 5,803.17. In Zurich trading SMI increased 10.90 or 0.17% to 6,421.14.