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Final Estimate of US First-Quarter GDP Declines


Today's financial recap and tomorrow's financial outlook.

European markets rallied as Mario Draghi, President of the ECB, said that the ECB has no plans to alter its monetary policy. The German DAX (INDEXDB:DAX) finished the day up 1.66%. Chinese money market rates began to normalize again as the Chinese government made efforts to control the liquidity squeeze.

The third estimate of US first-quarter GDP was unexpectedly revised downward from 2.4% to 1.8% due to declines in personal consumption and exports. Crude inventories rose by 18,000 barrels last week, according to the EIA. Crude oil was $0.16 higher at the close of floor trading.

Despite the negative macroeconomic news, US indices rallied throughout the day. The S&P 500 (INDEXSP:.INX) finished up 1.1%. All subsectors of the S&P were positive today with health care, utilities, consumer discretionary, and industrials in the lead with gains of more than 1.25%. Regional financials also broke above recent highs as rising interest rates show the greatest benefit to these banks. Larger investment banks like Goldman Sachs Group Inc (NYSE:GS) and Morgan Stanley (NYSE:MS) lagged. The 10-year yield dropped 5 bps to 2.535%, despite the very weak Treasury auction of $35 billion in 5-year notes. Gold took another big hit, plunging 4% on the day.

General Mills, Inc. (NYSE:GIS) reported earnings this morning before market open. EPS came in on par with expectations of $0.53. The $4.4 billion in revenue topped the expected $4.3 billion. Shares dropped 0.5% on the news.

Tomorrow's Financial Outlook

Great Britain's GDP will be released at 4:30 a.m. EDT tomorrow morning. EMU economic sentiment will be released at 5:00 a.m. EDT.

US jobless claims will be reported at 8:30 a.m. EDT. Initial weekly claims are expected to come in at 345K. US personal income and outlays will be released tomorrow at 8:30 a.m. EDT. Personal income is expected to see month-over-month growth of 0.2%. Consumer spending is expected to rise 0.4% over the same time period. Pending home sales will be released at 10:00 a.m. EDT. Sales are expected to have grown 1.0% over the past month.

ConAgra Foods, Inc. (NYSE:CAG), KB Home (NYSE:KBH) and Nike, Inc. (NYSE:NKE) will be reporting earnings tomorrow.

Japanese CPI and household spending will be released at 7:30 p.m. EDT.

Twitter: @Minyanville

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