U.S. stocks ended flat on Friday after the release of more earnings reports and GDP data that reaffirms the Federal Reserve’s position on an interest rate hike. Although missing the 2.6%-2.7% annual growth rate forecasts, the U.S. GDP for the second quarter was reported to be 2.3%. The markets were looking for a stronger economic rebound in this report, one that would indicate stronger earnings as well. With the stock market markedly above its long-term average valuation, strong earnings reports have nearly become a requirement in recent days for anything but a day in the red. Major indexes still managed to recover somewhat, although remaining eventually flat for the day. The Dow Jones industrial average declined 5.41 points, or 0.03%, to close the day at 17745.98, the Standard and Poor’s 500 index gained 0.06% to trade at 2108.63, and the Nasdaq Composite added 17.05 points, or 0.33%, to trade at 5128.78. Facebook (NASDAQ:FB) was weighing down on the market, as it posted earnings results after trading closed on Wednesday. The social media giant surpassed expectations in revenue and user growth but at the same time, its expenses grew significantly, causing its shares to tumble 2.7%.
Despite Thursday’s gains in Asian shares, July’s drop has proven to be the worst in the last six years. MSCI’s broadest index of Asia-Pacific shares outside Japan has added around 0.3%. Its monthly performance totaled at a 5.9% decline. The Chinese CSI300 index dropped 0.1%, adding to a massive 14.7% monthly decline. The Shanghai Composite Index fell 1%, adding to a monthly 13.4% decline, despite many attempts by the authorities to remedy the situation. Japan’s Nikkei stock index added 0.1%, adding up to a monthly gain of 1.4%. This is the only index in Asia (excluding Australia and New Zealand) to post positive results this month. Economic data from Japan has painted a slightly different picture, with a marked drop in household spending, declining consumer prices and high unemployment rates.
Commodities were weighed down by the strong dollar. Crude oil fell for a second straight session, as the global supply glut remained the key concern after the head of OPEC indicated that production would not be scaled back. Currently, oil is trading at $48.11 a barrel after declining 0.85% today. Gold also fell as a result of the strong dollar. Currently, gold is on track for a sixth week of declines – the longest since 1999. Gold declined 1% and is nearing a five-year low at $1083.9 an ounce.
Eurozone inflation data will be released later today, with the consumer price index (CPI) measuring changes in price across a number of categories. Canadian GDP will also be released today. U.S. and Eurozone manufacturing data will be released on Monday. U.S. nonfarm payrolls will be released next Friday. The Federal Reserve stressed its data-dependent position on raising interest rates, putting the report in focus.