LIVE MARKETS-Once more, with feeling: GDP, jobless claims, pending home sales

Nasdaq up ~1.5%, S&P 500 up ~0.8%, Dow slips ~0.1%

Tech leads S&P 500 sector gains; energy weakest sector

Euro STOXX 600 index off ~0.2%

Dollar up; bitcoin slips; gold, down; crude slides ~2.5%

U.S. 10-Year Treasury yield rises to ~3.78%

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ONCE MORE, WITH FEELING: GDP, JOBLESS CLAIMS, PENDING HOME SALES (1108 EDT/1508 GMT)

A spate of data on Thursday repeated a mantra market participants have memorized by now - the economy’s resilient, the consumer is strong, inflation is high, the labor market is tight, and no one wants to sell their house.

The U.S. economy grew at a slightly faster pace that previously expected in the first three months of 2023.

The Commerce Department’s second stab at first-quarter GDP (USGDPP=ECI) added 20 basis points to show 1.3% quarterly annualized growth.

Scratching below the surface, there were upward revisions to business investments, state/local government purchases, consumer spending, imports and exports, and a shallower that previously stated drop in private inventories, which nonetheless remained the largest detractor from the headline number.

Stripping out inventories, that headline would be a much more robust 3.4%.

“A reduction in inventories imply that the pace of production slowed and stocks were chewed down by consumer demand,” says Jim Baird, chief investment officer at Plante Moran Financial Advisors.

“Whether or not inventory decumulation will remain a headwind to growth in the coming quarter may hinge on businesses’ collective assessments of consumer demand,” Baird adds. “Recession concerns are real and growing, leaving many businesses undoubtedly hesitant to stock up aggressively in the face of potentially waning demand.”

Also in the detractor column, a downward revision to housing investment increased that component’s drag.

Core PCE prices landed at 5%, a tad warmer than the previously stated 4.9%.

But investors are likely able to look past that worrisome aspect, as the first quarter is now ancient history and the much fresher April PCE report is due tomorrow.

But back to the consumer, on whose shoulders sits 70% of the

American economy.

Spending on services was bumped a tad higher, adding 1.1 percentage points to the net, but durable goods - which encompasses everything from waffle irons to speed boats - contributed an impressive 1.3 ppts to the upside.

“We continue to be surprised at the resilience of the consumer and economy in the face of so much Fed tightening, and the S&P and Nasdaq continue to have a solid 2023, reflecting that strength,” says Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.

As analysts expected, the number of U.S. workers filling out first-time applications for jobless benefits (USJOB=ECI) inched a bit higher last week to 229,000, according to the Labor Department.

But, owing to a sharp downward revision to the prior week’s print, the number landed 6.5% south of consensus.

The four-week moving average, which irons out weekly volatility, moved sideways.

The data drives home how tight the labor market remains, with unemployment still hovering near half-century lows and about 1.6 unfilled positions for every jobless worker.

It also plainly shows that the growing list of high profile announced layoffs - not to mention tighter credit conditions due to Fed tightening - have yet to put so much as a dent in the labor market.

“While we expect the Fed to leave rates steady at its June meeting, the minutes from this month’s FOMC meeting made clear that a more significant loosening of labor market conditions is needed to keep rate hikes permanently off the table,” writes Nan

Ongoing claims (USJOBN=ECI) , reported on a one-week lag, came in at 1.794 million, a weekly decrease of 5,000 and 6,000 fewer than economists projected.

And finally, signed contracts for sales of pre-owned U.S. homes were weaker than expected in April.

The National Association of Realtors’ (NAR) Pending Home Sales index (USNAR=ECI) was unchanged from March, defying the 1% growth predicted by economists.

The pre-owned side of the U.S. housing market remains challenged by the dearth of available homes for sale, as rising borrowing costs are convincing homeowners who might otherwise consider selling to stay put.

And those same rising mortgage rates are squeezing affordability for would-be buyers.

“Not all buying interests are being completed due to limited inventory,” writes Lawrence Yun, NAR’s chief economist. “Affordability challenges certainly remain and continue to hold back contract signings, but a sizeable increase in housing inventory will be critical to get more Americans moving.”

Crucially, the pending home sales index is 38.4% below its August 2020 high, and is wallowing at lows last seen - aside from the COVID flash-crash - in 2010, when the housing market was crawling from the ashes of the Great Recession:

(Stephen Culp)

NASDAQ JUMPS MORE THAN 1% AS NVIDIA SURGES (1000 EDT/1400 GMT)

U.S. stocks are mostly higher in morning trading Thursday, with the Nasdaq (.IXIC) rising more than 1% after a strong forecast by chipmaker Nvidia (NVDA.O) .

Nvidia shares are up more than 24% after it forecast late Wednesday second-quarter revenue more than 50% above Wall Street estimates. It said it is increasing supply to meet surging demand for its artificial-intelligence chips, which are used to power ChatGPT and many similar services.

The Philadelphia SE semiconductor index (.SOX) is up 4.4% in early trading, while the S&P 500 technology sector (.SPLRCT) is up more than 3% and giving the index its biggest boost.

Here is the early market snapshot:

(Caroline Valetkevitch)

CHIP INDEX POISED TO POP AT THE OPEN (0858 EDT/1258 GMT)

On the back of Nvidia’s (NVDA.O) upbeat revenue forecast, chip stocks are poised to surge at Thursday’s open. The iShares Semiconductor ETF (SOXX.O) is quoted up about 5% in premarket trade.

If this holds, the Philadelphia SE Semiconductor index (.SOX) appears set to surge above its April-May highs when Thursday’s regular session kicks off:

With a near-5% thrust, the SOX would surpass its recent highs in the 3,230-3,234 area, and see its highest levels since April 2022.

Through Wednesday’s close, the semiconductor index is up a little more than 23% so far this year vs a 25% rise for the broader technology sector (.SPLRCT) , a 19.3% rise for the Nasdaq Composite (.IXIC) , and a 7.2% gain for the benchmark S&P 500 index (.SPX) .

Based on the expected opening strength, the SOX should pass tech with a ~29% YTD rise vs a ~28% YTD gain in the early going on Thursday.

The SOX appears to have formed an inverse head & shoulders pattern from mid-2022 to early-2023. The minimum pattern projection still calls for an eventual return to levels in excess of 3,800. Such a rally would put the SOX within striking distance of its intraday record peak of 4,068 set Jan. 4, 2022.

The rising 50-day moving average, which ended Wednesday at 3,070, is seen as a support level.

Meanwhile, through Wednesday, 26 of the 30 SOX members are higher this year, led by Nvidia’s 109% surge. And NVDA appears set to jump about 30% at the open further turning the tide back in favor of chipmakers vs equipment makers:

Indeed, since nearly testing its January low earlier this month, the SOX chipmaker/equipment maker ratio has turned up back in favor of chipmakers.

(Terence Gabriel)