Quiver Quantitative - The U.S. economy's resilience continues to defy expectations, with a robust fourth-quarter GDP growth of 3.3%, eclipsing forecasts of a slowdown. This surge in economic activity, amidst the Federal Reserve's aggressive rate hikes, has diminished recession fears. Core PCE inflation aligning with the Fed's 2% target amplifies optimism, signaling a potential soft landing for the economy. Despite a slight increase in jobless claims, overall economic indicators remain strong.
However, global market dynamics present a mixed picture. Oil prices have surged to a 2024 high, reflecting both the U.S. economic upswing and geopolitical tensions. In contrast, Tesla's (NASDAQ:TSLA) stock suffered a significant blow, dropping by 12% and losing $80 billion in market value after a sales growth warning. Intel (NASDAQ:INTC) also faced a setback, with its shares plunging 10% due to a bleak revenue forecast.
Market Overview: -U.S. economic data shines, with GDP exceeding forecasts and core PCE inflation hitting the Fed's target, raising hopes for rate cuts. -Wall Street celebrates with record highs, while oil prices and China worries cast shadows on the global rally. -Tesla tumbles after sales warning, Intel disappoints, but Europe and Japan offer dovish counterpoints.
Key Points: -U.S. GDP roars back in Q4, defying recession fears and exceeding expectations. -Core PCE inflation hitting the Fed's target of 2% fuels speculation of early rate cuts. -China's economic struggles persist despite stimulus efforts, raising investor concerns. -Evergrande liquidation fears and missed provincial growth targets dampen Chinese momentum. -European Central Bank hints at potential rate cut as early as April, adding to global dovish chorus. -Japan's core inflation dips below 2%, further complicating the Bank of Japan's policy stance.
Looking Ahead: -Today's PCE inflation data and December pending home sales could solidify the U.S. economic picture. -American Express (AXP), Colgate-Palmolive (NYSE:CL), and Norfolk Southern (NYSE:NSC) earnings may offer insights into consumer spending and corporate health. -Global markets will remain sensitive to oil price movements and developments in China and Europe.
Chinese markets remain under scrutiny as investors poured billions into equity funds, yet concerns over the property market and modest growth targets hint at challenges ahead. LVMH's strong sales, bolstered by Chinese demand, provide a glimmer of hope for luxury brands.
Overall, the U.S. economy's strong performance is a beacon of stability, but uncertainties in the oil market, corporate performance, and China's economic recovery could influence market dynamics in the coming period.
This article was originally published on Quiver Quantitative