Stocks bounced off of Wednesday's decline, with the Dow Industrials again leading the way on Thursday, shrugging off any suggestion that the economy or stock market was about to experience a slowdown.
On Friday morning, the Bureau of Economic Analysis (BEA) released the preliminary estimate of GDP for the third quarter, beating most of the positive projections, coming at at three percent growth.
Highlights of the report included a positive contribution from Personal Consumption Expenditures (PCE), offset by lower residential fixed investment and state and local government spending.
The 3.0% reading follows the second quarter's 3.1% advance, though the figures from the government are always subject to timely revisions (forever).
This should be good news for equity investors. The dollar is strengthening on the news.
Some are skeptical, however, noting that GDP is a very broad measure of economic strength or weakness and the fact that government spending is a component, which, at the federal level, is 40% borrowed money, making a mockery of the statistical importance of the data.
In other words, if a person borrowed $1000 to spend a total of $1800, one would not call that $1800 in spending, but $800 in real spending, plus $1000 in new debt, which, as everyone knows, should be repaid some day. As for the government and its $20 trillion - and growing - mountain of debt, that is probably never going to be repaid.
At the Close, Thursday, October 26, 2017:
Dow: 23,400.86, +71.40 (+0.31%)
NASDAQ: 6,556.77, -7.12 (-0.11%)
S&P 500: 2,560.40, +3.25 (+0.13%)
NYSE Composite: 12,352.43, +15.85 (+0.13%)
Friday, October 27, 2017
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