Investors are eagerly awaiting this Thursday’s release of advance estimates for the second quarter’s gross domestic product (GDP) by the Bureau of Economic Analysis at 8:30 a.m. ET.

In the first quarter of 2024, the U.S. economy grew at an annualized rate of 1.4%, a significant slowdown compared to the 3.4% growth in the fourth quarter of 2023. This deceleration was accompanied by a temporary spike in inflation, with the GDP price index jumping to 3.1% in the first quarter, raising fears of stagflation.

Besides the second quarter GDP data, investors will closely monitor the weekly jobless claims, expected to ease from 243,000 to 238,000, and June’s durable goods orders, projected to rise by 0.2% month-over-month.

Investors currently assign 100% odds to a Federal Reserve interest rate cut in September, according to CME Group’s FedWatch tool.

Economist Forecasts for Q2 2024 GDP

• Q2 GDP growth: The U.S. economy is expected to grow by 2% quarter-over-quarter annualized in the second quarter, up from 1.4% in the first quarter.
• GDP price index: Forecasted to decrease from 3.1% in the first quarter to 2.6% in the second quarter, reflecting a cooling of inflationary pressures.
• Core GDP price index: Expected to drop from 3.7% in the first quarter to 2.7% in the second quarter, excluding volatile energy and food prices.

Atlanta Fed GDPNow Tracker Points To 2.7% Growth

The Atlanta Fed’s GDPNow model has raised its second-quarter real GDP growth forecast to 2.7%, according to its latest update, continuing an upward trend from a low of 1.55% on July 3.

Consumer spending is expected to add 1.5 percentage points (pp) to GDP growth in the second quarter, up from 1.0pp in the first quarter.

Non-residential fixed investments are forecasted to contribute 0.75pp. Private inventories are projected to add 0.95pp, while government spending adds 0.42pp.

5 ETFs To Monitor Thursday

The advance estimates on the first-quarter GDP, released on April 25, 2024, impacted growth-sensitive stocks and safe-haven assets. Key movements included:

• The SPDR Dow Jones Industrial Average ETF DIA fell 0.9%.
• The iShares Russell 2000 ETF IWM dropped 0.6%.
• The Financials SPDR Select Sector Fund XLF decreased 0.6%.
• The iShares 20+ Year Treasury Bond ETF TLT rose 0.5%.
• The SPDR Gold Trust GLD increased 0.7%.

Based on previous market reactions, a lower-than-expected GDP reading could lead to a weakening in growth-linked stocks and sectors, with investors gravitating towards safer assets like Treasuries and gold.

Conversely, stronger-than-expected GDP figures might boost the U.S. dollar, especially if also the price index surpasses expectations.

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