US GDP Expanded by 2.3% in 2Q15
SPY gained 0.02% on the US economic growth report
The benchmark-tracking SPDR S&P 500 ETF Trust (SPY) gained 0.02% on July 30, as the US Bureau of Economic Analysis came out with its first advanced estimate for the 2Q GDP (gross domestic product). Wall Street gains on July 30 were led by Western Digital (WDC), Wynn Resorts (WYNN), and Vertex Pharmaceuticals (VRTX). WDC was up 9.77%, WYNN gained 8.42%, while VRTX advanced 7.83%. Among the nine sectors tracked by the S&P 500 Index, the utilities sector (XLU) advanced the most, registering a 0.74% gain.
The advanced estimate shows that GDP expanded by 2.3% in the second quarter of this year. In 1Q15, real GDP in the US increased by 0.6%.
GDP numbers are important to all economic participants
GDP represents the total value of the country’s production during the period and consists of the purchases of domestically produced goods and services by individuals, businesses, foreigners, and government entities. To investors and other economic participants in an economy, an assessment of the real GDP, which is adjusted for inflation, helps determine whether the value of output has gone up because more is being produced or simply because prices have increased.
To learn more about the importance of GDP numbers for investors, read Why GDP is a country’s most comprehensive economic scorecard.
2Q GDP fell short of expectations
The second quarter GDP figure came in below Wall Street expectations of 2.5%. GDP growth usually picks up in the second quarter, as first quarter headwinds like the severe winter weather tend to lessen with the onset of spring. The figure also fell short of last year’s second quarter growth figure when the US economy expanded by 4.6%.
The decline in oil prices coupled with the strengthening US dollar have restricted growth in the second quarter this year. We’ll dig deeper into this in the next part of the series.
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