Today is the last trading day of the first quarter, although the way the market rallied in yesterday’s final hour made it look as if market participants thought yesterday was the last trading day. It just might have been for a lot of participants who spied an extended holiday weekend with markets closed tomorrow for Good Friday.
Notably, the February Personal Income and Spending Report, which contains the Fed’s preferred inflation gauge in the PCE Price Index, will still be released at 8:30 a.m. ET (banks and government offices will remain open on Good Friday). Economists expect to see a 0.4% increase in the PCE Price Index and a 0.3% increase in the core-PCE Price Index
Sidebar: Briefing.com does not publish content on market holidays, so there won’t be a Page One column or review of the Personal Income and Spending Report on Friday. Added color on the report will be provided with Monday’s publication.
Today features news that Dow component Home Depot (HD) is acquiring SRS Distribution for a total enterprise value of approximately $18.25 billion with cash on hand and debt, a good bit of economic news, and a rejoinder from Fed Governor Waller (FOMC voter) that recent inflation and employment data have reinforced his view that there is no rush to cut the policy rate.
The pre-open reports included the third estimate for Q4 GDP and weekly initial and continuing jobless claims. After the open, we will get the March Chicago PMI (Briefing.com consensus 45.4; prior 44.0) at 9:45 a.m. ET, the final reading for the March University of Michigan Consumer Sentiment Index (Briefing.com consensus 76.5; prior 76.5) at 10:00 a.m. ET, and the February Pending Home Sales Report (Briefing.com consensus 2.1%; prior -4.9%) at 10:00 a.m. ET.
The third estimate for Q4 GDP was a good one — or we should say a better one than either the first estimate or the second estimate. The third estimate came in at 3.4% (Briefing.com consensus 3.2%; prior 3.2%), up from 3.2% in the second estimate and 3.3% in the advance estimate, helped by an upward revision to consumer spending. The GDP Price Deflator held steady at 1.6% (Briefing.com consensus 1.7%).
The key takeaway from the report is that it is dated information and won’t have market-moving impact other than to reinforce the market’s belief that the economy fared much better than expected in the final quarter of 2023 despite the Fed’s prior rate hikes.
Initial jobless claims for the week ending March 23 decreased by 2,000 to 210,000 (Briefing.com consensus 213,000) while continuing claims for the week ending March 23 increased by 24,000 to 1.819 million.
The key takeaway from the report is the low (and steady) level of initial jobless claims — a leading indicator — that also reinforces the market’s belief that employment conditions remain favorable for continued economic growth.
The equity futures market took the data in stride, which is to say it didn’t show much reaction.
Currently, the S&P 500 futures are unchanged and are trading fractionally above fair value, the Nasdaq 100 futures are down seven points and are trading fractionally below fair value, and the Dow Jones Industrial Average futures are up 41 points and are trading 0.2% above fair value.
There isn’t a lot of conviction in the futures trade, but with the S&P 500 closing a record high yesterday, one could venture to say that there is an ample level of contentment going into the holiday weekend that helps explain why there isn’t much conviction at this point in today’s trade.
It has been a good month again for the market, which is up 3.0% coming into today, and an even better quarter (+10.0%). That makes for a good Thursday thought in front of the market’s closure on Good Friday.
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Originally Posted March 28, 2024 – Good thoughts ahead of Good Friday closure
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