Skip to main content

A trader is seen on the floor at the New York Stock Exchange after the opening bell in Lower Manhattan, New York May 14, 2013.

BRENDAN MCDERMID/REUTERS

The stock market is back in rally mode today, thanks to a pair of U.S. economic statistics that seem to have soothed investor anxiety over the state of business conditions south of the border.

Both the weekly jobless claims and revised first-quarter GDP figures came in just a tad on the weak side, but the numbers had a 'bad news is good news' interpretation by the markets. Hence, the Dow Jones industrial average is up nearly a half per cent in early trading and other indexes are following suit.

With the growth numbers lacklustre, it isn't likely that the Fed is going to tighten monetary policy precipitously, or so the thinking goes. Meanwhile, the data show the U.S. plodding along in a steady, if not unspectacular fashion. In the past, investors have called this the Goldilocks scenario, with the economy advancing at a pace that isn't either too hot or too cold to derail the stock market.

Story continues below advertisement

The revised figure of U.S.growth in the first quarter was trimmed to 2.4 per cent from 2.5 per cent, a modest drop due to a larger contraction in U.S. government spending that was first estimated.

The economists at RBC Financial Group believe growth will pick up later in the year, enough to make the Fed tweak policy, but not do anything rash.

"As the fiscal drag runs its course, growth is likely to strengthen over the second half of the year, though the pace is likely to be insufficient to put significant downward pressure on the unemployment rate. While the Fed will take the acceleration in the pace of growth as encouraging, with the unemployment rate still running one percentage point above their target, no change in the Fed funds rate is likely in 2013. Instead, the strengthening in the pace of economic growth is likely to result in the Fed tapering the pace of securities purchases late in the year," RBC said in a note to clients.

Meanwhile, weekly U.S. first time jobless claims, a measure of new layoffs, increased by 10,000 to 354,000.

The figure probably suggests another so-so employment report for May, probably the most important monthly economic release in the U.S., due next Friday.The consensus is for non-farm payrolls to rise 163,000, not much change from the 165,000 increase in April.

Report an error Editorial code of conduct
Tickers mentioned in this story
Unchecking box will stop auto data updates
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • All comments will be reviewed by one or more moderators before being posted to the site. This should only take a few moments.
  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed. Commenters who repeatedly violate community guidelines may be suspended, causing them to temporarily lose their ability to engage with comments.

Read our community guidelines here

Discussion loading ...

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.
Cannabis pro newsletter