US GDP Slows In Q4, Market Heats Up As Jobless Claims Tick Higher

The SPDR S&P 500 SPY is moving higher Thursday morning after GDP came in below estimates and jobless claims topped forecasts. 

What To Know: Gross domestic product, or GDP, increased 2.6% in the fourth quarter, according to a third estimate from the Bureau of Economic Analysis on Thursday.

The number came in below economist expectations for a gain of 2.7%. 

"The increase in real GDP primarily reflected increases in private inventory investment, consumer spending, nonresidential fixed investment, federal government spending, and state and local government spending that were partly offset by decreases in residential fixed investment and exports. Imports decreased," the release states.

The increase follows a 3.2% real GDP increase in the third quarter. The deceleration was primarily due to a downturn in exports and decelerations in consumer spending, nonresidential fixed investment and state and local government spending. 

The Labor Department also released jobs data on Thursday. Jobless claims increased by 7,000 for the week ending March 25 to 198,000 from an unrevised level of 191,000 in the prior week. The number came in above average economist estimates of 196,000, according to Benzinga Pro.

Continuing claims totaled 1.689 million, an increase of 4,000 from the previous week's revised level.

See Also: US Stocks Eye Strong Q1 Finish As Futures Point To Higher Open: Jobless Claims, GDP Data In Focus

Why It Matters: The SPY is reacting positively to Thursday's data. 

The Federal Reserve had been hammering home the message that "ongoing increases" were likely to be appropriate, but the committee eased its stance at its last meeting after raising rates another 0.25%. 

In a press conference following the decisions on rates, Fed chair Jerome Powell explained that the committee no longer sees "ongoing increases" as appropriate, and instead they opted to say that some "firming" may be needed. 

According to CME Group data, the market is currently projecting a 50% chance of a subsequent 0.25% increase and a 50% chance of a Fed pause. 

Check This Out: Billionaire Barry Sternlicht Says Fed Is A 'Neutron Bomb' Using 'Steamroller' To 'Kill A Small Fly'

March CPI data is set to be released on April 12. The Fed Isn't due to make it's next decision on rates until early May.

SPY Price Action: The SPY was up 0.63% at $403.89 on Thursday morning, according to Benzinga Pro.

Photo: Predrag Kezic from Pixabay.