Two quarters of negative growth would mean the economy is entering into a recession but we can only be certain after a few months. Stocks took a hit last week from that GDP number and also the surprise spike in jobless claims.

Investors are worried about the economy in the remaining second half of the year, as the market’s focus shifts from a weaker-than-expected GDP report to the Friday jobs data. GDP revisions also show a recession may have started in the fourth quarter of last year.

Economists had expected Q2 to show growth of 2.3% with a strong boost from the stimulus rebate checks, but that number shows lower at 1.9%. GDP was also revised to a negative number for the 2007 fourth quarter, a contraction of 0.2%. That was the first decline since 2001.

Analysts has been expecting the coming Q3 and Q4 to be weaker than Q2 so be expecting the analysts to start trimming the forecasts based on the Q2 result.

The US major indexes were finishes at about where it started a week ago. The Dow will likely to test the 10800 levels again this week, with U.S. mortgage giants; Fannie Mae and Freddie Mac may report further downgrades to their forecasts for credit losses in their upcoming second-quarter results.

Two ways to play the market, you can make a prediction first then bet on that direction you have predicted. The other alternative is to wait for the market to react, and then you move along. Which is better? You tell me. Sometimes it is better not to do anything.

“Inactivity strikes us as intelligent behavior” - Warren Buffett

Popularity: 16% [?]

Don't want to miss a thing? Subscribe to my RSS feed!




You Should Also Check Out This Post:

More Active Posts: