US growth misses forecast; S&P500 coiling


  • US Q4 GDP: 2.2% vs 2.3% exp

  • Sizable downwards revision from 2.6% prior

  • US stocks trade in a narrowing range

The US economy grew slower than expected at the end of last year, with the final GDP print of last year marking a sizable drop on the prior release and also signalling a second consecutive miss. Turning to the numbers, a Q4 final GDP Q/Q reading of 2.2% (annualised) is far from disastrous compared to other developed economies, but it does represent a larger drop than the 2.4% expected from a prior reading of 2.6%. One aspect of the release to highlight is that trade doesn’t seem to have weighed as heavily as previously with net exports coming in at -0.2% after -1.1% initially (and a large negative reading last time out).      

Looking at the composition of the growth net exports was less of a drag than before but the fall in investment could be seen as a worrying sign. Source: XTB Macrobond


It’s been a range bound week really so far for the US stock markets with an attempted break lower on Monday finding support around 2790. Since then there’s been a series of lower highs and higher lows as the range has narrowed - something which could be seen as a coiling before the next larger move. A break above 2835 would no doubt be positive and give bulls another tilt at the 2865 region that capped their advance last week whereas a break below 2790 would threaten to open up the possibility of another leg lower after last Friday’s large declines.   

The US500 could be coiling ahead of its next larger move with 2790 possible support and 2835 offering potential resistance. Source: xStation


One of the best performing American stocks this afternoon is Lululemon (LULU.US on xStation) with the price of the apparel retailer rallying as much as 15% on the open after announcing an impressive set of results last night. A 26% increase in net revenue to $1.2B for the quarter ended February 3 is one of the highlights as well as adjusted diluted earnings per share of $3.84 for the fiscal year compared to $2.59 for 2017.   


But the Jefferies analyst Randal Konik says that while the fundamentals of the company are still strong, the stock is fully valued. "Strong traffic has continued into 1Q, and the biz is progressing across categories, geographies, and channels," he wrote in a note sent out to clients on Thursday. "We see further oppty ahead, as digital initiatives take hold and the int'l growth story continues. That said, valuation already reflects a lot of these prospects, so we remain Hold-rated."

Lululemon shares have jumped around 15% to their highest ever level this afternoon after the apparel retailer announced pleasing results. Source: xStation


Chart of the day - US100 (27.07.2021)
Economic calendar: CB Consumer Confidence, Big Tech earnings
Morning wrap (27.07.2021)
Daily summary: Cryptocurrencies rose sharply, USD under pressure
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