US GDP Data Highlights: Q3 GDP grows 2.8%, Initial Jobless Claims hold steady at 213,000

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The number of Americans filing new applications for unemployment benefits fell again last week, but many laid-off workers are experiencing long bouts of joblessness, keeping the door open to another interest rate cut from the Federal Reserve in December.

Initial claims for state unemployment benefits dropped 2,000 to a seasonally adjusted 213,000 for the week ended November 23, the Labor Department said on Wednesday. The report was published a day early because of the Thanksgiving holiday on Thursday.

The American economy expanded at a healthy 2.8% annual pace from July through September on strong consumer spending and a surge in exports, the government said Wednesday, leaving unchanged its initial estimate of third-quarter growth.

The Commerce Department reported that growth in US gross domestic product — the economy’s output of goods and services — slowed from the April-July rate of 3%. But the GDP report still showed that the American economy — the world’s largest — is proving surprisingly durable. Growth has topped 2% for eight of the last nine quarters.

Initial US jobless claims decreased by 2,000 to 213,000 for the week ending November 23, signalling continued strength in the labour market. However, continuing jobless claims for the week ending November 16 rose by 9,000 to 1.907 million, according to the Labor Department, reported CNBC.

US Initial Jobless Claims For The Week Ended November 23 Unchanged at 2.13 lakh Vs the previous week

US Q3 GDP Growth Rate QoQ 2nd Estimate At 2.8% Vs Estimate Of 2.8%
US Q3GDP Price Index QoQ 2nd Estimate At 1.9% Vs Estimate Of 1.8%
US Q3 GDP Sales QoQ 2nd Estimate At 3% Vs Estimate Of 3%

Futures tied to the Dow Jones Industrial Average rose 25 points, sitting near flat. S&P 500 futures fell 0.1%, while Nasdaq-100 futures dipped 0.2%.

US stock futures showed little movement on Wednesday as investors awaited the release of the Federal Reserve’s preferred inflation measure. Dow Jones Industrial Average futures inched up 6 points, while S&P 500 futures slipped 0.1%, and Nasdaq-100 futures dropped 0.3%.

Higher fuel prices could loom if President-elect Donald Trump enforces proposed tariffs on Canada, industry experts warn. On Truth Social, Trump vowed to impose a 25% tariff on imports from Canada and Mexico via an executive order on January 20, potentially violating regional trade agreements. However, analysts remain skeptical about the feasibility of these levies, reported CNBC.

European stocks slipped on Wednesday as investors weighed the potential impact of President-elect Donald Trump’s proposed tariff hikes. The pan-European Stoxx 600 fell 0.2% by mid-morning, with most sectors trading in the red.

US stock futures showed minimal movement on Wednesday as investors awaited the Federal Reserve’s preferred inflation measure. Dow Jones Industrial Average futures edged down 11 points (0.02%), S&P 500 futures slipped 0.1%, and Nasdaq-100 futures dipped 0.3%, reported CNBC.

The personal consumption expenditures price index excluding food and energy — the Fed’s preferred measure of underlying inflation — is projected to have risen by 0.3% in October from September, and by 2.8% from a year earlier, in what would be the largest advance since April, reported Bloomberg.

The report is also expected to reveal resilient household spending and steady income growth at the start of the fourth quarter. Consumer outlays, unadjusted for price changes, are forecast to climb 0.4% after a 0.5% advance the previous month. Personal income is seen rising 0.3% for a second month, buoyed by healthy yet moderating job growth.

South Korea’s Kospi dropped 0.7% to 2,503.06 as Samsung Electronics lost 3.4% after the company announced a shift in its top management. The company said the reshuffle, which included appointing Young Hyun Jun, a Samsung vice chairman who heads its Device Solutions division, to be CEO was intended to strengthen Samsung’s competitiveness, focusing on computer chips.

Chinese markets advanced, led by strong buying of technology shares. Hong Kong’s Hang Seng gained 2.4% to 19,615.17, while the Shanghai Composite index added 1.5% to 3,309.78.

A 10% drop in industrial profits may have raised expectations for additional government stimulus, and investors may have resumed buying, seeking bargains after prices fell recently.

Tokyo’s Nikkei index fell 0.8% to 38,134.97 as the Japanese yen surged in value against the US dollar. The dollar fell to 151.59 yen from 153.08 yen. It had traded above 155 yen recently, but uncertainty over the future course of US trade policy has led investors to buy the yen as a safe haven, analysts said.

Bitcoin extended its decline for the third consecutive session on Wednesday, as traders continued to lock in profits following its recent rally. The world’s largest cryptocurrency has struggled to maintain its momentum after falling short of reaching the coveted $100,000 mark.

Amid ongoing caution, Bitcoin’s price dropped as investors braced for key U.S. economic data later today, including the PCE price index and revised Q3 GDP figures. These reports are expected to influence the Federal Reserve’s outlook on interest rates, which could, in turn, impact risk assets like Bitcoin.

Most Gulf stock markets rose on Wednesday, with investors focusing on US economic data, including core PCE, initial jobless claims, and GDP figures, which will provide crucial insight into the Federal Reserve’s likely rate cut in December. Markets currently see a 63% chance of a 25-basis-point rate reduction. Dubai’s index gained 0.4%, boosted by a 3.7% rise in Emirates Central Cooling Systems, while Abu Dhabi added 0.4%.

Oil prices steadied, with investors watching for developments in the Israel-Hezbollah ceasefire and the upcoming OPEC+ meeting. Saudi Arabia’s benchmark fell 0.3%, impacted by a 2.8% drop in Al Taiseer Group.

The US dollar steadied on Wednesday as investors weighed President-elect Donald Trump’s tariff promises and awaited the release of the October Personal Consumption Expenditures (PCE) price index.

Despite Trump’s announcement of significant tariffs on China, Canada, and Mexico, the dollar rose 0.15% against the Canadian dollar to C$1.40755.

Meanwhile, the New Zealand dollar strengthened following a 50 basis-point rate cut from the Reserve Bank of New Zealand. The dollar index, tracking its performance against six major currencies, was down 0.07% at 106.83.

Stocks rose sharply on Tuesday, with the S&P 500 and the Dow Jones Industrial Average reaching fresh highs, as investors shrugged off the threat of new tariffs from President-elect Donald Trump. The Dow gained 123.74 points (0.28%) to close at 44,860.31, while the S&P 500 added 0.57%, reaching 6,021.63.

Both indices hit new intraday and closing records, and the Nasdaq Composite rose 0.63% to 19,174.30. Despite Trump’s tariff announcement, which included a 25% tariff on products from Mexico and Canada, and new levies on Chinese goods, the market largely ignored the threat.

Gold prices traded within a narrow range on Wednesday, November 27, as investors awaited US inflation data to gauge the likelihood of a Federal Reserve rate cut in December.

Spot gold was stable at $2,635.56 per ounce as of 0222 GMT, moving within a slim $9 per ounce range. US gold futures saw a modest rise of 0.6% to $2,635.80 per ounce.

In India, 24-carat gold dropped by ₹1,310 to ₹7,740.3 per gram, while 22-carat gold was down ₹1,200 at ₹7,096.3 per gram, reflecting the global trend. Read more details here

Federal Reserve officials are divided on the pace of interest rate cuts, though the CME Group’s FedWatch tool suggests a 63% chance of a 25-basis-point cut in December. Despite inflation remaining above the Fed’s 2% target, officials expressed confidence that inflation is easing and the labour market remains strong, according to the minutes from their November 7 meeting.

The Federal Open Market Committee indicated that further rate cuts are likely, though the timing and extent remain uncertain.

The Fed lowered its benchmark interest rate by 0.25 percentage points earlier this month to a range of 4.5%-4.75%, with further gradual cuts expected if inflation continues to fall sustainably towards 2% and the economy remains near full employment. The Fed’s final policy meeting of the year is set for December 17-18.

US GDP grew at an annual rate of 2.8% in Q3 2024, according to the ‘advance estimate’ from the Bureau of Economic Analysis (BEA), down from 3.0% in Q2. The slowdown was driven by a decline in private inventory and residential fixed investment, though stronger exports, consumer spending, and federal government spending provided a partial offset. Imports also saw an uptick.

The number of Americans filing for unemployment benefits dropped to a seven-month low of 213,000 for the week ending Nov. 16, suggesting a rebound in job growth for November after disruptions from hurricanes and strikes. However, unemployment rolls rose to levels not seen since late 2021, indicating that it’s taking longer for laid-off workers to secure new jobs, potentially pushing the unemployment rate higher.

The key release today is the US GDP report for Q3 2024, marking the second preliminary estimate. Expectations are for a slight revision down from the initial 3.00% annualised growth to 2.80%. The final data is due at the end of December.