MARY REICHARD, HOST: Coming next on The World and Everything in It, the Monday Moneybeat.
NICK EICHER, HOST: A tale of two economic indicators last week: One telling us trade war with China and high interest rates are threatening corporate profits, and in turn threatening the longest-running bull market in history. The other telling us the economy’s on the cusp of the best growth in more than a dozen years.
The Commerce Department reported third quarter gross domestic product. This is a measure of the total output of goods and services for the period July to September. It came in 3.5 percent, and that’s at the high end of expectations.
Coming off a second quarter GDP of 4.2 percent, the third quarter results all but guarantee at least a 3 percent full-year GDP. And that would be the best performance in 13 years.
REICHARD: Very strong third-quarter consumer spending more than offset the losses in American exports. That’s blamed in part on the president’s punitive import tariffs. Last quarter, exports drove GDP up. This quarter, they were a drag on GDP. Second quarter exports increased almost 10 percent. Third quarter, they declined 3-1/2 percent.
EICHER: Worries about a lengthy trade war putting continued stress on American exports stoked pessimism on Wall Street last week. Corporate earnings disappointed investors and drove the markets down. All the major stock indexes fell significantly. The Dow Jones Industrials finished the week off 3 percent. The Nasdaq and the Russell 2000 fell 3.8 percent. The Standard and Poor’s 500, 3.9 percent down.
The S&P 500 is now off 9.3 percent from its September peak. That’s very close to the textbook definition of a market correction, which would be 10 percent. The S&P 500 is a benchmark index. Along with the Dow and the Russell 2000, those three indexes’ losses last week wiped out all their gains for the year. The only major index not in the red so far this year is the Nasdaq. But last week’s loss cut its year-to-date gain precisely in half.
REICHARD: Disappointing corporate earnings in tech companies drove the Nasdaq down. Amazon’s earnings report failed to meet expectations and its stock value suffered for it. The online retailer fell out of the two-member Trillion Dollar Club. Amazon’s now worth $800 billion. That leaves only Apple, and its earnings report is due Thursday. Analysts are looking for a $13.5 billion third quarter. If you break that down, it’d mean Apple earns $6 million an hour.
EICHER: And that’s today’s Monday Moneybeat.