US Economy Surges in Q4 With Job Market Remaining Robust Despite Tech Layoffs

By: Miguel A. Rodriguez

10:53, 27 January 2023

dolarul american

GDP in the fourth quarter exceeded analyst expectations, and initial jobless claims dropped to 186k, suggesting a strong job market despite tech company layoffs. 

Yesterday's economic data release from the U.S. was mixed, so it did not have a clear and direct impact on the market when it was released. 

On the one hand, preliminary GDP for the fourth quarter was 2.9% higher than the 2.6% average forecast of analysts, and initial jobless claims fell to 186k, indicating that the job market remains tight despite layoff announcements at many of the big tech companies. 

However, the trade balance showed an increase in the deficit to -90.27 B, indicating the weakness of exports, and in the GDP figures, the price component data decreased, which may be an indicator that the inflation figure, personal consumption spending, to be released today, will be lower. 

The Federal Reserve prefers this data to measure inflation, and a figure lower than expected would be positively received by the markets. 

In fact, market interest rates, or treasury bond yields, remained at their lowest level due to low GDP price component data; the 10-year bond was trading below 3.50%, despite strong headline GDP data. Normally, a higher-than-expected GDP figure would have resulted in a rebound in bond yields. 

Related: How to trade and invest in Bonds 

Wall Street indices enjoyed a good day in the market, with the Nasdaq seeing particularly strong gains due to Tesla's impressive 8% rise in share prices. Last night, Tesla released its fourth-quarter results, reporting higher-than-expected revenue and raising its sales forecasts. 

Yesterday's bullish momentum caused the Tech100 to break the bearish trend line, placing it in a favorable position, technically speaking, and anticipating better performance in the near future. 

In the foreign exchange market, the day was characterized by a modest technical correction, with the US dollar rising slightly despite downward pressure on market interest rates. The dollar index rose by approximately 0.40%. 

Related: EurUsd analysis and price predictions 

Sources: Bloomberg, Reuters 

Share this article

This information prepared by capex.com/za is not an offer or a solicitation for the purpose of purchase or sale of any financial products referred to herein or to enter into any legal relations, nor an advice or a recommendation with respect to such financial products.This information is prepared for general circulation. It does not regard to the specific investment objectives, financial situation, or the particular needs of any recipient.You should independently evaluate each financial product and consider the suitability of such a financial product, by taking into account your specific investment objectives, financial situation, or particular needs, and by consulting an independent financial adviser as needed, before dealing in any financial products mentioned in this document.This information may not be published, circulated, reproduced, or distributed in whole or in part to any other person without the Company’s prior written consent.
Past performance is not always indicative of likely or future performance. Any views or opinions presented are solely those of the author and do not necessarily represent those of capex.com/zaJME Financial Services (Pty) Ltd trading as CAPEX.COM/ZA acts as intermediary between the investor and Magnasale Trading Ltd, the counterparty to the contract for difference purchased by the Investor via CAPEX.COM/ZA, authorised & regulated by the Cyprus Securities and Exchange Commission with license number 264/15.  Magnasale Trading Ltd is the principal to the CFD purchased by investors.