🇺🇸 US growth disappointments

and stocks fall again

Good morning investors! The market saw some shockers yesterday as fear continues to dominate.

Today we cover:

  • Economic growth slows

  • Jobless claims jump

  • Stocks continue to decline

📊 Economy and News 

U.S. Economic Growth Slows in Q4, Further Cooling Expected

U.S. economic growth slowed to a 2.3% annualized rate in the fourth quarter of 2024, down from 3.1% in the previous quarter, according to the Commerce Department. The slight revision from initial estimates reflects weaker consumer spending and investment, despite gains in government spending and exports.

Overall, the economy expanded 2.8% in 2024, slightly below 2023’s 2.9% growth but still above the Federal Reserve’s 1.8% non-inflationary target. However, early 2025 indicators suggest further cooling, with harsh winter weather dampening retail sales, housing, and job growth.

Tariffs introduced by the Trump administration have also raised concerns about inflation, potentially limiting the Fed’s ability to cut interest rates further. The core PCE inflation rate, a key Fed metric, rose to 2.7% in Q4, up from 2.5% previously reported. Meanwhile, the Fed has paused rate cuts after reducing rates by 100 basis points to 4.25%-4.50% since September.

Global hits:

Jobless claims jump: Weekly jobless claims rose by 22,000 to a seasonally adjusted 242,000 for the week ending February 22, marking the largest increase since October. Economists had expected 221,000 claims.

The rise was largely attributed to snowstorms in the Midwest and Northeast, as well as volatility from the Presidents' Day holiday. Despite recent federal job cuts, no significant impact on claims has been observed yet.

Unadjusted claims fell slightly, with declines in California, Texas, and other states offsetting increases in Massachusetts, Rhode Island, and Illinois. Meanwhile, layoffs tied to government spending cuts are expected to contribute to further claims in the coming weeks.

Pending home sales: Contracts to buy previously owned homes fell 4.6% in January, reaching an all-time low of 70.6 on the National Association of Realtors’ Pending Home Sales Index. Higher mortgage rates and rising home prices have squeezed affordability, leading to a steeper decline than the 1.3% drop economists expected. Sales were also down 5.2% year-over-year.

📈 Stocks

S&P 500 5,861.57 (-1.59%)
DJIA 43,239.50 (-0.45%)
NASDAQ 18,544.42 (-2.78%)
BRENT CRUDE 73.80 (+1.75%)
* Prices as of Feb 28th, 12:20 AM UTC

Nvidia takes the market lower

The stock market remains in negative territory for the week and month, with both the S&P 500 and the Nasdaq tracking their worst weekly performance since September 2024.

With just one trading session left in February, all three major indexes are set to close lower. The S&P 500 has declined nearly 3%, while the Dow and Nasdaq have dropped 2.9% and 5.5%, respectively.

The S&P 500 experienced a volatile session, pressured by Trump saying Mexico, Canada tariffs will start March 4, plus additional 10% on China. Additionally, a negative reversal in Nvidia shares after earnings weighed on the broader market.

Despite exceeding fourth-quarter expectations on both revenue and earnings, Nvidia’s stock declined -8%. The AI leader provided strong guidance, signaling continued demand in the artificial intelligence sector. However, concerns emerged as the company reported a drop in gross margins and delivered its smallest revenue beat in two years, raising doubts about whether it can sustain its strong momentum.

The broad market index remains in the red for the week and month. Both the broad market index and the tech-heavy Nasdaq are on pace for their worst week since September 2024.

Check this: Meta plans to release standalone Meta AI app in effort to compete with OpenAI’s ChatGPT. Elsewhere, Google announces layoffs in its HR, cloud units as part of on-going cost cuts.

Exciting: Standard Chartered still sees bitcoin hitting $500,000 despite recent selloff. Plus, Dell forecasts $15 billion of AI server sales this year as it beats earning expectations.

💵 Personal Finance

How to invest in precious metals Part II

Let’s continue yesterday’s topic and look at a few more ways to invest in precious metals, particularly gold:

Gold futures

This option comes with leverage, which gives you the option to make money quickly. an agreement to buy or sell a certain amount of gold at a later date. The contract itself is what is traded on an exchange.

You will perks such as no management fees and higher liquidity than physical gold, but you may have to pay a commission.

Risks: You can lose all or a great part of your investment due to how risky this option is.

Gold ETFs

Those who do not want the risk of gold futures and the trouble of physical gold can buy an exchange-traded fund (ETF) that tracks the commodity.

Some popular options include abrdn Physical Gold Shares ETF, SPDR Gold Shares, and iShares Gold Trust. This option offers very high liquidity as it works like stock with the option to sell any day.

In addition, you can invest in mining companies. This gives you more ways to earn money, i.e.: when gold prices rise, the stock typically goes up. Plus, you might make more money if the miner raises production over time.

What do you think of gold? Join our Discord channel and talk to other investors about investing in precious metals and benefitting from the current situation.

💰 Be a Better Investor

"It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong."

George Soros

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👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.