The Jim Bakker Show

Wall Street opens flat as North Korea tensions fade

By Sruthi Shankar

(Reuters) – U.S. stocks opened flat on Tuesday after North Korea’s leader delayed a decision on firing missiles towards Guam, pointing to receding tensions between the United States and North Korea.

Pyongyang’s plans to fire missiles near the U.S. Pacific territory prompted a surge in tensions in the region last week, with President Donald Trump saying the U.S. military was “locked and loaded” if North Korea acted unwisely.

“I think it is a bit of a follow through on North Korea that has stepped back, things are back to somewhat normal”, said Mark Spellman, portfolio manager at Alpine Funds in New York.

“U.S. companies and the markets have also been benefiting from the global economic expansion. For the first time in many years, you’ve got a lot of economies through out the world doing better,” Spellman added.

At 9:42 a.m. ET (1342 GMT), the Dow Jones Industrial Average <.DJI> was up 29.01 points, or 0.13 percent, at 22,022.72, the S&P 500 <.SPX> was up 1.17 points, or 0.05 percent, at 2,467.01.

The Nasdaq Composite <.IXIC> was up 1.12 points, or 0.02 percent, at 6,341.35.

Six of the 11 major S&P sectors were lower, with telecom sector’s <.SPLRCL> 0.70 percent fall leading the decliners.

Data showed U.S. retail sales recorded their biggest increase in seven months in July as consumers boosted purchases of motor vehicles as well as discretionary spending.

The data helped the dollar touch its highest level against a basket of major currencies <.DXY> in nearly three weeks.

Among stocks, Home Depot <HD.N> was down 2.6 percent, despite the U.S. home improvement chain reporting quarterly profit and comparable sales that topped estimates. The stock weighed the most on the Dow and the S&P 500.

Coach <COH.N> was off more than 6 percent after the handbag maker issued full-year sales forecast that missed analysts’ estimates.

Dick’s Sporting Goods <DKS.N> hit near seven-year lows after the sportswear retailer’s quarterly same-store sales and profit missed estimates.

Advance Auto Parts <AAP.N> touched near four-year low after the company lowered its 2017 comparable store sales forecast.

Synchrony Financial <SYF.N> rose 3.4 percent after Warren Buffett’s Berkshire Hathaway <BRKa.N> said it had added a 17.5-million share stake in the credit card issuer.

Declining issues outnumbered advancers on the NYSE by 1,432 to 1,122. On the Nasdaq, 1,354 issues fell and 1,001.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Anil D’Silva)

Simmering North Korea tensions knock back Wall Street

By Sruthi Shankar

(Reuters) – U.S. indexes were trading at session lows on Thursday afternoon, with the Dow and the Nasdaq posting triple-digit point declines, as investors fretted over escalating tensions between the United States and North Korea.

North Korea said it was completing plans to fire four intermediate-range missiles over Japan to land near the U.S. Pacific island territory of Guam in an unusually detailed threat.

The threat followed U.S. President Donald Trump’s warning on Tuesday that any threats by Pyongyang would be “met with fire and fury like the world has never seen”.

“Markets are looking for any reason at all for a reset. That reset is being triggered by North Korea geopolitical concern and stretched valuations,” said Peter Kenny, senior market strategist at Global Markets Advisory Group, New York.

Trump’s comments on Tuesday ended the Dow’s nine-day streak of record closes.

Investors on Thursday scampered to safe-haven assets such as gold and the Swiss franc, helping the precious metal hit a more two-month high.

The CBOE Volatility Index <.VIX>, the most widely followed barometer of expected near-term stock market volatility, rose to a near three-month high of 15.36.

At 12:36 p.m. ET (1636 GMT), the Dow Jones Industrial Average <.DJI> was down 158.98 points, or 0.72 percent, at 21,889.72 and the S&P 500 <.SPX> was down 27.37 points, or 1.11 percent, at 2,446.65.

The last time the S&P 500 fell over 1 percent was on May. 17.

The Nasdaq Composite <.IXIC> was down 115.35 points, or 1.82 percent, at 6,236.98. Apple <AAPL.O> was down 2.3 percent, weighing most on the index.

Shares of Macy’s <M.N> tumbled 9.5 percent and Kohl’s <KSS.N> 6.7 percent after the department store operators reported a drop in quarterly same-store sales that stoked concerns that their turnaround may still be a long way off.

Retailers’ results are being keenly watched by investors to gauge the companies’ strategy to counter No. 1 online retailer Amazon.com’s <AMZN.O> growth.

Data showed U.S. producer prices unexpectedly fell in July, recording their biggest drop in nearly a year, while another set showed the number of Americans filing for unemployment benefits unexpectedly rose last week.

“This inflation data for the month was not good. Wall Street was expecting more inflation. Every August we have some reason to run up the alarm”, Kenny said.

However, Federal Reserve Bank of New York President William Dudley suggested on Thursday that the central bank was on track to raise interest rates once more as he expects sluggish inflation to rise over the next several months.

Blue Apron <APRN.N> slumped as much as 19.1 percent to a record low after the meal-kit delivery service provider reported a bigger-than-expected loss in its first quarterly report as a public company.

Perrigo <PRGO.N> surged 17.6 percent after the drugmaker raised its full-year adjusted profit forecast. Declining issues outnumbered advancers on the NYSE by 2,461 to 444. On the Nasdaq, 2,303 issues fell and 567 advanced.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Sriraj Kalluvila)

Wall Street retreats after Dow breaches 22,000

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., July 19, 2017. REUTERS/Brendan McDermid

By Tanya Agrawal

(Reuters) – The Dow breached the 22,000 mark briefly in early trading on Wednesday, powered by Apple’s stellar results, before stocks retreated sharply across sectors as investors locked in gains.

Apple <AAPL.O> jumped as much as 6.46 percent to a record high, after the world’s largest publicly listed company reported strong results and iPhone sales, and signaled its upcoming 10th-anniversary phone is on schedule. The stock is up about 30 percent this year.

Microsoft <MSFT.O> and Facebook <FB.O> were among the top drags on both the S&P and the Nasdaq.

However, the S&P 500 information technology index <.SPLRCT> is up about 22 percent year to date, leading other sectors, as investors look for growth in an otherwise low-growth environment.

“Typically at those big round numbers the market seems to hesitate … I’m looking at this as a situation where the underlying evidence as to why the stock market has responded well is the fertile climate for corporate profits which is likely to remain,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott.

The Dow has risen 11 percent in 2017, even as Wall Street is losing confidence that President Donald Trump and a Republican-controlled Congress would be able to cut taxes and increase infrastructure spending this year.

The Dow hit the 20,000 mark in late January and crossed the 21,000 mark in just over a month on March 1.

Two-thirds of S&P 500 companies have reported their second-quarter earnings so far and 72 percent of them have beaten Wall Street’s expectations, according to Thomson Reuters I/B/E/S. In a typical quarter, 64 percent of the companies beat expectations.

At 12:35 p.m. ET (1635 GMT), the Dow Jones Industrial Average <.DJI> was up 11.56 points, or 0.05 percent, at 21,975.48, the S&P 500 <.SPX> was down 7.04 points, or 0.28 percent, at 2,469.31.

The Nasdaq Composite <.IXIC> was down 34.35 points, or 0.54 percent, at 6,328.59.

Nine of the 11 major S&P 500 sectors were lower, with the telecommunications index’s <.SPLRCL> 1.05 percent loss leading the decliners.

Data showed U.S. private employers added 178,000 jobs in July, after adding 191,000 jobs in June. Economists polled by Reuters expected an addition of 185,000 jobs. The data comes ahead of the more comprehensive non-farm payrolls data on Friday.

AutoNation <AN.N> fell 6.19 percent after the largest U.S. auto retail chain, reported a fall in quarterly profit.

Cardinal Health <CAH.N> fell 9.34 percent after the drug distributor’s 2018 profit forecast missed analysts’ estimate.

Declining issues outnumbered advancers on the NYSE by 1,851 to 970. On the Nasdaq, 2,145 issues fell and 687 advanced.

(Reporting by Tanya Agrawal; Editing by Arun Koyyur)

Dow at record on strong earnings; Apple earnings awaited

By Tanya Agrawal

(Reuters) – U.S. stocks were higher in late morning trading on Tuesday, with the Dow coming within spitting distance of the 22,000 mark, helped by strong corporate earnings.

The Dow pierced through the historic 20,000 milestone in January and the 21,000 mark barely one and a half months later.

All eyes will now be on the quarterly performance of Dow-component Apple <AAPL.O>, which reports after the closing bell. The iPhone maker’s shares were up 0.25 percent.

Tech has been the best performing sector this year, despite recent bouts of volatility on rising valuation concerns. The tech index’s <.SPLRCT> 0.49 percent rise on Tuesday led the major S&P sectors.

Amazon <AMZN.O> provided the biggest boost to the S&P 500 and the Nasdaq with its 1.5 percent rise.

“While valuations overall and for the tech sector isn’t cheap, some of the most powerful earnings growth has come from large-cap technology names,” said Bill Northey, chief investment officer at U.S. Bank Wealth Management.

Investors have been counting on earnings to support high valuations for equities. The S&P 500 is trading at about 18 times earnings estimates for the next 12 months, above its long-term average of 15 times.

S&P 500 earnings are expected on average to have grown 10.8 percent in the second quarter, according to Thomson Reuters I/B/E/S.

“We are two-thirds through the earnings season and estimates are going only higher, including for the full year, which is helping support the fundamentals-driven market.” said Northey.

At 10:58 a.m. ET (1458 GMT), the Dow Jones Industrial Average <.DJI> was up 89.92 points, or 0.41 percent, at 21,981.04 and the S&P 500 <.SPX> was up 5.6 points, or 0.22 percent, at 2,475.90.

The Nasdaq Composite <.IXIC> was up 16.49 points, or 0.26 percent, at 6,364.61.

A 0.22 percent fall in healthcare <.SPXHC> led the laggards. Pfizer <PFE.N> was down 1.10 percent after the drugmaker’s quarterly revenue missed expectations.

Regeneron <REGN.O> fell 3.58 percent following a rating downgrade by a brokerage. The stock was the top drag on the Nasdaq.

Economic data showed U.S. consumer spending barely rose in June as income failed to increase for the first time in seven months.

The core PCE numbers – the Federal Reserve’s preferred metric to gauge inflation – for June edged up 0.1 percent following a similar increase in May.

In the 12 months through June, the so-called core PCE price index increased 1.5 percent after advancing by the same margin in May, remaining below the Fed’s 2 percent target rate.

Under Armour <UA.N> fell 6.41 percent after the sportswear maker cut its full-year sales forecast.

Sprint <S.N> jumped 9.78 percent after swinging to a quarterly profit for the first time in three years.

Advancing issues outnumbered decliners on the NYSE by 1,599 to 1,113. On the Nasdaq, 1,376 issues fell and 1,282 advanced.

(Reporting by Tanya Agrawal in Bengaluru; Editing by Anil D’Silva)

Wall St. rises as Comey testimony springs no surprise

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., June 2, 2017. REUTERS/Brendan McDermid

By Tanya Agrawal

(Reuters) – U.S. stocks were higher in early afternoon trading on Thursday after former FBI Director James Comey’s testimony was seen by investors as having no smoking gun that could affect Donald Trump’s presidency.

Comey, who was investigating alleged Russian meddling in the 2016 U.S. presidential election, said he had no doubt that Russia interfered with the election, but was confident that no votes had been altered.

Comey said he was disturbed by Trump’s bid to get him to drop a probe into former national security adviser, Michael Flynn, but would not say whether he thought the president sought to obstruct justice.

Investors were concerned that any major revelation by Comey could dampen already flagging momentum for Trump’s agenda of lower taxes and lax regulations.

Bets that Trump can implement his agenda are partly behind a rally that has taken stock indexes to record highs.

“I think the market is taking less of an alarmist review of this situation because there is no smoking gun here. So it’s not particularly impactful for thinking about … Trump’s economic agenda to go through,” said Thomas Simons, money market economist at Jefferies & Co in New York.

Earlier on Thursday, the European Central Bank signaled no further interest rate cuts as euro zone prospects improved, but said subdued inflation meant it would continue to pump more stimulus into the region’s economy.

Investors are also awaiting the results of the UK general election. Opinion polls show Theresa May’s Conservative Party leading between 5 and 12 percentage points over the main opposition Labour Party, suggesting she would increase her majority.

“The market cares because if Theresa May loses the majority that would be disruptive of the Brexit process,” said Art Hogan, chief market strategist at Wunderlich Securities in New York.

“Getting back into something that seemed to be a fair and orderly process into something that’s going to be more disruptive would not be a market positive.”

At 12:36 p.m. ET, the Dow Jones Industrial Average <.DJI> was up 68.55 points, or 0.32 percent, at 21,242.24 and the S&P 500 <.SPX> was up 4.06 points, or 0.16 percent, at 2,437.2.

The Nasdaq Composite <.IXIC> was up 14.46 points, or 0.23 percent, at 6,311.84.

Six of the 11 major S&P sectors were lower, with the defensive utilities index’s <.SPLRCU> 1.04 percent loss topping the decliners.

Financials <SPSY> rose 1.59 percent leading the gainers.

Shares of Alibaba Group Holding <BABA.N> were up 11.3 percent at $139.78 after the company said it expected revenue growth of 45-49 percent in the 2018 fiscal year.

Yahoo <YHOO.O>, which owns a 15.5 percent stake in Alibaba, rose 8.3 percent.

Nordstrom <JWN.N> jumped 10.6 percent to $44.78 after the department store operator said that some members of the controlling Nordstrom family have formed a group to consider taking the company private.

Advancing issues outnumbered decliners on the NYSE by 1,624 to 1,188. On the Nasdaq, 1,832 issues rose and 926 fell.

(Reporting by Tanya Agrawal in Bengaluru; Additional reporting by Sinead Carew and Dion Rabouin; Editing by Anil D’Silva and Savio D’Souza)

Tech leads Wall Street higher; jobs data falls short

By Chuck Mikolajczak

NEW YORK (Reuters) – U.S. stocks closed at record levels for a second consecutive session on Friday, as gains in technology and industrial stocks more than offset a lukewarm jobs report.

Nonfarm payrolls increased by 138,000 in May, well short of the 185,000 expected by economists. The prior two months were revised lower by 66,000 jobs than previously reported.

Average hourly earnings rose 0.2 percent in May, following a similar gain in April, but the unemployment rate fell to a 16-year low of 4.3 percent.

Despite the disappointing data, market participants still largely anticipate the Federal Reserve to raise rates at its June 13-14 meeting, with traders expecting a 90.7-percent chance of a quarter-point hike, according to Thomson Reuters data.

“It’s certainly surprising. It doesn’t really correlate well with virtually all the other data on the labor market that we’re seeing,” said Russell Price, senior economist at Ameriprise Financial Services Inc in Troy, Michigan.

The modest increase, however, could raise concerns about the economy’s health after gross domestic product growth slowed in the first quarter and a string of softening data this week, including reports on housing and auto sales.

The economy needs to create 75,000 to 100,000 jobs per month to keep up with growth in the working-age population. Job gains are slowing as the labor market nears full employment.

The Dow Jones Industrial Average <.DJI> rose 62.11 points, or 0.29 percent, to 21,206.29, the S&P 500 <.SPX> gained 9.01 points, or 0.37 percent, to 2,439.07 and the Nasdaq Composite <.IXIC> added 58.97 points, or 0.94 percent, to 6,305.80.

For the week, the S&P rose 0.95 percent, the Dow added 0.59 percent and the Nasdaq gained 1.54 percent.

Industrials <.SPLRCI>, up 0.49 percent, and technology <.SPLRCT>, up 1.04 percent, were the best performing sectors. The tech sector has been the top performer among the major S&P sectors, with a 2017 gain of 21.26 percent.

The tech sector was led by Broadcom <AVGO.O>, which rose more than 8 percent to hit an all-time high of $253.76, after the chipmaker’s quarterly results beat analysts’ expectations.

Shares of financials <.SPSY>, which benefit from higher interest rates, fell as much as 0.9 percent after the jobs data sparked some worry the Fed could become cautious after the June meeting, and closed down 0.37 percent.

Energy <.SPNY> was the worst-performing sector, down 1.18 percent. Brent oil tumbled below $50 a barrel on worries that President Donald Trump’s decision to abandon a climate pact could spark more crude drilling in the United States and worsen a global glut.

Lululemon Athletica <LULU.O> jumped 11.5 percent to $54.29 after the athletic apparel maker’s quarterly profit beat estimates.

Advancing issues outnumbered declining ones on the NYSE by a 1.34-to-1 ratio; on Nasdaq, a 2.07-to-1 ratio favored advancers.

The S&P 500 posted 28 new 52-week highs and 11 new lows; the Nasdaq Composite recorded 82 new highs and 70 new lows.

About 6.37 billion shares changed hands in U.S. exchanges, compared with the 6.65 billion daily average over the last 20 sessions.

(Additional reporting by Herb Lash; Editing by Nick Zieminski)

Slow U.S. jobs growth takes shine off dollar, stocks hold all-time highs

A U.S. five dollar note is seen in this illustration photo June 1, 2017. REUTERS/Thomas White/Illustration

By Vikram Subhedar

LONDON (Reuters) – The dollar retreated slightly after disappointing U.S. jobs growth data on Friday though world stocks clung on to record highs, having gained 11 percent so far this year.

Nonfarm payrolls increased 138,000 last month as the manufacturing, government and retail sectors lost jobs, the Labor Department said on Friday.

While the job gains could still be sufficient for the Federal Reserve to raise interest rates this month, the modest increase could raise concerns about the economy’s health after growth slowed in the first quarter.

“This number is not the kind of report that derails the Fed from raising rates in June,” said Tom Porcelli, chief U.S. economist at RBC Capital Markets in New York.

“We’re in a mature phase of the cycle, job growth is going to slow down. The Fed has been talking about this for over a year at this point and they are braced for that reality.”

The dollar index <.DXY>, which measures the greenback’s strength against a basket of major currencies, fell 0.3 percent.

Stock futures on Wall Street trimmed gains slightly and were last trading little changed.

Overnight, data showing a healthy uptick in private sector hiring and factory activity during May bolstered expectations that the U.S. economy was picking up speed and lifted U.S. stocks after two days of losses.

Those gains filtered through to global stocks, lifting the MSCI All-Country World index <.MIWD00000PUS> 0.4 percent to a record high and on track to post a seventh straight week of gains, the longest such run since 2010.

Stocks in Europe joined the party with German bluechips powering ahead to a record, up 1.6 percent. The UK’s FTSE 100 <.FTSE> also hovered near its highest-ever levels rose 0.4 percent.

So far this year investors have pumped $140 billion globally into stock funds, according to fund flow data from Bank of America Merrill Lynch and EPFR showed on Friday.

Global equities attracted $13.7 billion in the latest week to Wednesday, the largest inflows in five weeks, as investors loaded up on risk.

In commodities, however, oil prices resumed their slide with key futures contracts down more than 2 percent amid worries that U.S. President Donald Trump’s decision to abandon a global climate pact could spark more crude drilling in the United States, stoking a persistent glut in global supply.

Global benchmark Brent crude futures <LCOc1> fell to $49.63 a barrel, while U.S. West Texas Intermediate crude <CLc1> by more than a dollar to $47.36 per barrel.

(Reporting by Vikram Subhedar; Editing by Hugh Lawson and Keith Weir)

U.S. stocks open higher after strong private jobs data

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 31, 2017. REUTERS/Brendan

By Sweta Singh

(Reuters) – U.S. stocks were higher on Thursday after better-than-expected private sector hiring showed that the labor market continues to strengthen, further boosting chances of a rate hike by the Federal Reserve later this month.

The ADP private sector employment report showed that 253,000 jobs were added in May, well above the 185,000 jobs estimated by economists polled by Reuters.

The report by payrolls processor ADP acts as a precursor to the much-awaited nonfarm payrolls data, due on Friday, that includes hiring in both the public and private sectors.

“I think the Fed has already made up its mind. Unless we have a real weak employment data tomorrow I think it’s a go-ahead for the Fed to raise rates in June,” said Peter Cardillo, chief market economist at First Standard Financial in New York.

San Francisco Federal Reserve Bank President John Williams said on Wednesday he sees a total of three interest rate increases for this year as his baseline scenario, but views four hikes as also being appropriate if the U.S. economy gets an unexpected boost.

Forecasts from Fed officials suggest that a median of two more hikes are planned before the end of the year.

Traders priced in an 89 percent chance of a rate hike in the upcoming Fed meeting on June 14, according to Thomson Reuters data.

At 9:52 a.m. ET the Dow Jones Industrial Average was up 21.5 points, or 0.1 percent, at 21,030.15, the S&P 500 was up 6.16 points, or 0.25 percent, at 2,417.96 and the Nasdaq Composite was up 26.51 points, or 0.43 percent, at 6,225.03. Seven of the 11 major S&P 500 sectors were higher, with the health and technology sectors leading the gainers.

The Institute for Supply Management is likely to report that its national manufacturing index slipped to 54.5 in May from 54.8 in April. The data is expected at 10:00 ET.

“We have a multitude of macro news coming out today and that will set the tone for the market’s direction … I think we are looking at another trying session,” Cardillo said.

Deere’s shares were up 1.9 percent at $124.74 after the farm and construction major said it would buy privately held German road construction company Wirtgen Group for $5.2 billion, including debt.

Goodyear Tire’s shares were up 5.7 percent at $34.03 after Morgan Stanley raised its rating to “overweight” from “underweight”.

Box Inc was up 3.9 percent at $19.40 after the cloud storage firm’s quarterly earnings edged ahead of Wall Street analysts’ expectations.

Advancing issues outnumbered decliners on the NYSE by 1,931 to 657. On the Nasdaq, 1,707 issues rose and 624 fell.

The S&P 500 index showed 28 new 52-week highs and 11 new lows, while the Nasdaq recorded 82 new highs and 70 new lows.

(Reporting by Sweta Singh in Bengaluru; Editing by Saumyadeb Chakrabarty and Anil D’Silva)

U.S. economy grows at tepid 1.2 percent; business spending softens

FILE PHOTO - A family shops at the Wal-Mart Neighborhood Market in Bentonville, Arkansas, U.S. on June 4, 2015. REUTERS/Rick Wilking/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – The U.S. economy slowed less than initially thought in the first quarter, but there are signs it could struggle to rebound sharply in the second quarter amid slowing business investment and moderate consumer spending.

Gross domestic product increased at a 1.2 percent annual rate instead of the 0.7 percent pace reported last month, the Commerce Department said on Friday in its second GDP estimate for the first three months of the year.

“The second estimate paints a better picture about the degree of slowing in activity at the start of the year, but the main concern about soft growth in private consumption remains,” said Michael Gapen, chief economist at Barclays in New York.

That was the worst performance since the first quarter of 2016 and followed a 2.1 percent rate of expansion in the fourth quarter. The government revised up its initial estimate of consumer spending growth, but said inventory investment was far smaller than previously reported.

The first-quarter weakness is a blow to President Donald Trump’s ambitious goal to sharply boost economic growth rates. During the 2016 presidential campaign Trump had vowed to lift annual GDP growth to 4 percent, though administration officials now see 3 percent as more realistic.

Trump has proposed a range of measures to spur faster economic growth, including corporate and individual tax cuts. But analysts are skeptical that fiscal stimulus, if it materializes, will fire up the economy given weak productivity and labor shortages in some areas.

The economy’s sluggishness, however, is probably not a true reflection of its health. GDP for the first three months of the year tends to underperform because of difficulties with the calculation of data.

Economists polled by Reuters had expected GDP growth would be revised up to a 0.9 percent rate.

Prices of U.S. Treasuries trimmed gains and U.S. stock indexes slightly pared losses after the data. The dollar gained modestly against a basket of currencies.

While GDP growth appears to have regained speed early in the second quarter, hopes of a sharp rebound have been tempered by weak business spending, a modest increase in retail sales last month, a widening of the goods trade deficit and decreases in inventory investment.

EQUIPMENT SPENDING SLOWING

In a second report on Friday, the Commerce Department said non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, were unchanged in April for a second straight month.

Shipments of these so-called core capital goods dipped 0.1 percent after rising 0.2 percent in March. Core capital goods shipments are used to calculate equipment spending in the government’s gross domestic product measurement.

The GDP report also showed an acceleration in business spending equipment was not as fast as previously estimated. Spending on equipment rose at a 7.2 percent rate in the first quarter rather than the 9.1 percent reported last month.

Growth in consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose at a 0.6 percent rate instead of the previously reported 0.3 percent pace. That was still the slowest pace since the fourth quarter of 2009 and followed the fourth quarter’s robust 3.5 percent growth rate.

Businesses accumulated inventories at a rate of $4.3 billion in the last quarter, rather than the $10.3 billion reported last month. Inventory investment increased at a $49.6 billion rate in the October-December period.

Inventories subtracted 1.07 percentage point from GDP growth instead of the 0.93 percentage point estimated last month.

The government also reported that corporate profits after tax with inventory valuation and capital consumption adjustments fell at an annual rate of 2.5 percent in the first quarter, hurt by legal settlements, after rising at a 2.3 percent pace in the previous three months.

Penalties imposed by the government on the U.S. subsidiaries of Credit Suisse and Deutsche Bank related to the sale of mortgage-backed securities reduced financial corporate profits by $5.6 billion in the first quarter.

In addition, a fine levied on the U.S. subsidiary of Volkswagen <VOWG_p.DE> related to violations of U.S. environmental regulations cut $4.3 billion from nonfinancial corporate profits.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

Wall Street rises on investor relief after Trump budget

A trader works inside a booth on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 3, 2017. REUTERS/Brendan McDermid

By Sinead Carew

(Reuters) – Wall Street ended higher on Tuesday after the release of President Donald Trump’s budget plan but gains were tempered by declines in consumer discretionary stocks amid weakness in auto-parts companies.

While Tuesday’s economic data was weak, investors were relieved Trump’s first full budget plan was largely as expected, even if it is not expected to be approved in Congress.

“There were no large surprises. The market is pleased with that,” said Wade Balliet, Chief Investment Strategist at Bank of the West.

Trump’s budget called for a hike in infrastructure and military spending, along with a raft of politically sensitive cuts, in areas such as healthcare and food assistance programs, with the aim of chopping government spending by $3.6 trillion and balancing the budget over the next decade.

The S&P 500 ended below its session high. It topped 2,400 points a few times during the session for the first time since the markets’ plunge last Wednesday on concerns about the future of Trump’s presidency.

While the President is on an overseas trip, stocks were helped by a lack of major news updates related to the government probe on possible ties between his election campaign and Russia.

“With the President being away, with the news cycle slowing a little bit, investors have nibbled their way back in,” said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey.

“This market has had tremendous strength on the idea that the new administration is going to be able to push through a pro-business platform. To the extent it loses political credibility the market has had trouble holding these gains.”

The Dow Jones Industrial Average <.DJI> rose 43.08 points, or 0.21 percent, to 20,937.91, the S&P 500 <.SPX> gained 4.4 points, or 0.18 percent, to 2,398.42 and the Nasdaq Composite <.IXIC> added 5.09 points, or 0.08 percent, to 6,138.71.

In the morning, U.S. economic data showed new single-family home sales in April tumbled from near a nine-and-a-half-year high, while manufacturing activity for May fell to the lowest level since September.

Ten of the 11 major S&P 500 sectors ended higher. Financials <.SPSY> rose 0.8 percent, helped by a 1.2 percent gain in the bank subsector <.SPXBK>.

Consumer discretionary <.SPLRCD> was the biggest laggard with a 0.4 percent drop.

The biggest drag on the consumer sector was Autozone Inc <AZO.N>, down 11.8 percent to $581.4. The auto part retailer’s quarterly results missed expectations. Advance Auto Parts <AAP.N> fell 4.6 percent while O’Reilly Automotive <ORLY.O> fell 3.3 percent and Genuine Parts <GPC.N> shares fell almost 2 percent.

Advancing issues outnumbered declining ones on the NYSE by a 1.48-to-1 ratio; on Nasdaq, a 1.11-to-1 ratio favored advancers.

The S&P 500 posted 49 new 52-week highs and 8 new lows; the Nasdaq Composite recorded 81 new highs and 59 new lows.

About 5.95 billion shares changed hands on U.S. exchanges, below the 6.9 billion average for the last 20 sessions.

(Additional reporting by Tanya Agrawal, Gayathree Ganesan in Bengaluru; Editing by Savio D’Souza and Nick Zieminski)

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