Dow Jones Closes Lower On Weak U.S. GDP Data

On Friday, the Dow Jones Industrial Average closed lower after the U.S. posted weak GDP data. Both the Chicago PMI and consumer sentiment was shown to edge higher. Those pieces of data is what likely kept the DOW from falling further. The DOW closed lower by 0.19% to 20,940.51.

Weak GDP Data

The U.S. government released GDP data that was weaker than expected. It revealed that the U.S. economy grew by 0.7% for the first quarter of 2017. There are a few problems with respect to this figure. The first being that analysts were expecting the economy to at least grow by 1%.

The miss on the expectation by analysts was just the first problem with the GDP data. The second problem is that it was the weakest GDP data reported in over three years. The last time the GDP figure came in at 0.7% was the first quarter of 2014. That’s just about three years ago, and it is never a good thing growing at an older rate.

The final problem is that the reported figure was way below the 2.1% growth rate seen in the fourth quarter of 2016. It is only the first quarter where Trump has taken over as President of the United States. There will need to be a few quarters looked at to determine if his policies help boost the GDP higher.

A plan was outlined this past week that indicates the government is interested in trying to bring the corporate tax rate down to 15% from 35%. The hope is that it will spur higher GDP growth thereafter. The DOW fell sharply because of GDP data coming in weaker than expected.

Chicago PMI Data

What helped the DOW from falling further would have been the better than expected Chicago PMI data. The U.S. government revealed that the Chicago PMI for the month of April hit 58.3. There are a few reasons why this reported number is good. First off, it rose from March’s reading of 57.7.

That is a good thing, because the goal for the Chicago PMI is to continue to improve month over month. The second reason would be because it beat expectations. Analysts had forecast the reading to drop in the month of April to 56.5. The third reason relies on the fact that it is the best reading shown since 2015.

Finally, the reading remains above 50. Any reading above 50 indicates growth or expansion. Why did the Chicago PMI data rise? It is quite simple really. It was because of a pickup in demand. Matter of fact, it was the third consecutive month where demand had picked up pace.

The Chicago PMI number is important because it shows the health of the manufacturing sector in the United States. The higher the number is over 50 the greater the manufacturing sector appears to be.

Consumer Sentiment

The consumer sentiment data was mixed, but still seen as a positive for the DOW. It was reported that consumer sentiment for the month of April came in at 97. That was lower than the expectation that it would rise to 98. Of course, it wasn’t all bad news though.

The good part was that consumer sentiment still increased from the prior month. In March the reading only stood at 96.9. It wasn’t that much of a beat, but a higher number over last month is good anyways.

The main takeaway is that at least 50% of those who took the survey stated that an improved financial situation is what made them give a higher score. A stronger than expected job market, along with a falling unemployment rate are just a few of the positives.

What Binary Options Traders Should Watch For

There are a few things that traders should watch for.

The first of which is to see if U.S. GDP can rise past 0.7% growth. It doesn’t have to get back to the 2.1% growth seen last year right away. As long as it starts to go in the right direction then the U.S. economy should be okay.

The second item would be the Chicago PMI data. The data was strong, but the key thing to watch for would be to see if it stays above 50. If it does, that will indicate the the manufacturing sector is continuing to expand at a moderate pace.

The final item that traders should keep an eye on would be consumer sentiment. After all, it is a big indicator about how U.S. citizens feel about the economy. The better they feel about the economy, the more they will spend. That in turn boosts confidence for businesses as well.