EQUITIES JUMP ON THE WEEK AS 1Q GDP IS REVISED UP AND NEW HOME SALES AND DURABLE GOODS ORDERS SURPRISE ON THE UPSIDE
Weekly Market Update — July 1, 2023
|Weekly Market Performance
*Source: Bonds represented by the Bloomberg Barclays US Aggregate Bond TR USD. This chart is for illustrative purposes only and does not represent the performance of any specific security. Past performance cannot guarantee future results.
Stocks Close out the Week, Month and Quarter on a High Note
The major U.S. benchmarks reversed last-week’s declines in a big way, as all the major U.S. indices jumped more than 2% to close out the week and close out the month of June and the second quarter. And when the final Wall Street bell rung out, investors were eagerly awaiting their quarterly performance statements, as there was a lot to celebrate, including that for the 2nd quarter:
And for the YTD:
Back to focusing on this week, there was a lot of surprising economic data and a broadening of the rally, as small-caps outperformed dramatically and value rallied relative to growth too. And while the technology-heavy NASDAQ underperformed relative to small-caps and even the large-cap S&P 500 on the week, its YTD performance is record-setting (best start to the year since 1983).
Of the surprising economic data on the week that contributed to an almost-giddy mood on Wall Street, we saw that:
GDP Revised Up
As the week came to a close, the Bureau of Economic Analysis reported that real gross domestic product (GDP) increased at an annual rate of 2.0% in the first quarter of 2023. In the fourth quarter, real GDP increased 2.6%
Here is one of the more interesting – and surprising – revelations from the BEA’s press release:
“The GDP estimate released today is based on more complete source data than were available for the “second” estimate issued last month. In the second estimate, the increase in real GDP was 1.3%. The updated estimates primarily reflected upward revisions to exports and consumer spending that were partly offset by downward revisions to nonresidential fixed investment and federal government spending. Imports, which are a subtraction in the calculation of GDP, were revised down.”
“The increase in real GDP in the first quarter reflected increases in consumer spending, exports, state and local government spending, federal government spending, and nonresidential fixed investment that were partly offset by decreases in private inventory investment and residential fixed investment. Imports increased.
Compared to the fourth quarter, the deceleration in real GDP in the first quarter primarily reflected a downturn in private inventory investment and a slowdown in nonresidential fixed investment that were partly offset by an acceleration in consumer spending, an upturn in exports, and a smaller decrease in residential fixed investment. Imports turned up.
Manufactured Durable Goods Orders Up for 3rd Consecutive Month
On Tuesday, the U.S. Census Bureau announced the May advance report on durable goods manufacturers’ shipments, inventories and orders:
New orders for manufactured durable goods in May, up three consecutive months, increased $4.9 billion or 1.7% to $288.2 billion.
New Orders Over the Past 12 Months
Shipments of manufactured durable goods in May, up two of the last three months, increased $4.8 billion or 1.7% to $282.7 billion. This followed a 0.6% April decrease. Transportation equipment, also up two of the last three months, led the increase, $4.0 billion or 4.6% to $91.8 billion.
Unfilled orders for manufactured durable goods in May, up five of the last six months, increased $10.6 billion or 0.8% to $1,302.0 billion. This followed a 0.8% April increase. Transportation equipment, also up five of the last six months, drove the increase, $10.8 billion or 1.4% to $803.9 billion.
Inventories of manufactured durable goods in May, up five of the last six months, increased $1.2 billion or 0.2% to $522.9 billion. This followed a 1.0% April increase. Machinery, up thirty-one consecutive months, led the increase, $0.5 billion or 0.5% to $94.4 billion.
Nondefense new orders for capital goods in May increased $5.7 billion or 6.7% to $91.0 billion. Shipments increased $2.7 billion or 3.4% to $82.9 billion. Unfilled orders increased $8.1 billion or 1.1% to $748.7 billion. Inventories increased $0.1 billion or 0.1% to $225.5 billion. Defense new orders for capital goods in May decreased $2.7 billion or 14.7% to $15.9 billion. Shipments decreased $0.2 billion or 1.2% to $13.2 billion. Unfilled orders increased $2.7 billion or 1.3% to $213.6 billion. Inventories increased $0.1 billion or 0.2% to $24.2 billion.
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