Stocks Flat On Favorable GDP Numbers
The Dow closed flat today as GDP numbers turned out weaker as expected. That was also why the Dow still opened higher despite the number being released before market opened. Even though a lower GDP is largely expected, some profit taking still became evident later in the day. SO, what exactly is GDP?
GDP measures the dollar value of all goods and services produced within the borders of the United States, regardless of who owns the assets or the nationality of the labor in producing that output. Healthy GDP growth is usually between 2.0% and 2.5%which translates into strong corporate earnings, which bodes well for the stock market. A higher GDP growth leads to accelerating inflation, while lower growth indicates a weak economy. Therefore, depending on the prevailing situation, a higher GDP may not bode well for the economy or the stock market.
Today, not only does the GDP number point towards lower inflation, the detailed data also showed that consumer spending has increased, which is great for the economy.
Overall, the GDP numbers with a lower jobless claim points towards a healthy, growing economy and provides a good bullish undercurrent to the stock market.
TECHNICAL ANALYSIS
Well, no surprise today as the Dow moved sideways in order to form another step in the Staircase formation. Volume is also growing healthily. I remain bullish.
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