It Is A Game: Economists believe the GDP contracted by a faster rate while seeing improvement in economic data and 2Q earnings report?!?!
By Daniel at 24 August, 2009, 8:48 am
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“Better than expected” in GDP result will eventually fuel the rally. They scale down the expectation and manage to beat it. What a game!
“Investors will watch this week’s new home sales and consumer data to see if the economy’s recovery is on track and whether the rally in U.S. stocks — now at 2009 highs — will continue.
On Friday, Wall Street got more confirmation that the economy is on the mend with a report showing existing home sales in July rose 7.2 percent — the fastest pace in nearly two years and a sign that housing is pulling out of a three-year slump. The data, combined with stronger-than-expected second-quarter earnings, pushed the Standard & Poor’s 500 and the Nasdaq to the highest levels since last October.
So the report on new home sales for July, due Wednesday, is likely to get more scrutiny than usual from investors who want proof that the rally has been driven by more than hope for an economic turnaround.”
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Stronger-than-expected second-quarter earnings have helped bolster stocks over recent weeks. The S&P 500 is up about 11 percent since July 1.
Of the 480 companies in the S&P 500 that have reported second-quarter results so far, 73 percent beat expectations, while 9 percent were in line with expectations and 19 percent were below forecasts. That compares with 61 percent of companies beating expectations in a typical quarter, according to Thomson Reuters.
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About 70 percent of GDP is derived from consumer spending. So the economic recovery will depend on consumers resuming their love affair with the retail sector. The government will take a second look at second-quarter GDP on Thursday. Economists polled by Reuters believe that GDP contracted at an annual rate of 1.4 percent in the second quarter, exceeding the initial estimate of a 1 percent decline. .”
http://news.yahoo.com/s/nm/20090823/bs_nm/us_column_stocks_outlook;_ylt=At3CcBDThexNataM6gYNhi50fNdF
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