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Global Market Wrap-Up - January 30, 2013

Wednesday, January 30, 2013
Mark Hanna
U.S. stocks fell Wednesday as the market digested a very poor initial read on fourth quarter GDP, and no new news out of the Federal Reserve. The S&P 500 and NASDAQ both fell 0.4% with most of the selling coming late in the day. Markets opened to news of -0.1% fourth quarter GDP as exports disappointed and federal government spending - especially on defense - sunk dramatically. Now if you recall just ahead of the election GDP surged 3.1% in the third quarter on the back of the highest defense spending in many years. Some interesting timing. But bigger picture it shows how the U.S. economy is increasingly becoming dependent on federal government.
  • The biggest cuts came in military spending, which tumbled at a rate of 22.2%, the largest drop since 1972.
As for today's Fed statement, no change to action with commentary as below:
  • Fed officials noted in their latest announcement that economic activity had "paused in recent months," largely because of weather and temporary factors, but said they expected growth would continue at a "moderate pace" and that the jobs market would improve.
  • Kansas City Fed President Esther George dissented from the statement, saying she was concerned that “the continued high level of monetary accommodation increases the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.”
Oil continued its recent run, up another 0.4% to $97.94 while silver shot up 3.2% to $32.18 and gold gained 1.15% to $1679.90.

Britain fell 0.25%, while both Germany and France fell 0.5%.

Japan gained 2.3% and China rose 1.0%.
  • Japan retail sales rose 0.1% from November, when they fell 0.1%. The median estimate was for a 0.4% gain. Sales rose 0.4% from a year earlier.