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STOCKS FALL, OIL SURGES: Here's what you need to know
(Flickr / O Palsson)
Stocks closed lower to end the short trading week, but gained for the month of May. The second estimate of GDP showed the economy contracted in the first quarter, but not as badly as expected.
First, the scoreboard:
Dow: 18,010.68, -115.44, (-0.64%)
S&P 500: 2,107.39, -13.40, (-0.63%)
Nasdaq: 5,070.03, -27.95, (-0.55%)
And now, the top stories on Friday:
The second estimate of gross domestic product showed the US economy shrank by 0.7% in the first quarter. Economists had expected the revision to show a 0.9% slump, after the first estimate showed just 0.2% growth. The Bureau of Economic Analysis said the decrease reflected a drop in exports, government spending, and nonresidential fixed investment. Also, corporate profits tanked due to slow growth, the strong dollar, and lower energy prices, according to Bloomberg economist Carl Riccadonna.
One positive takeaway from the report was a 1.4% rise in gross domestic income. GDI, which measures the costs as well as incomes of all domestically produced goods and services, is "a much more accurate gauge of the economy's true performance over the three months of this year," Capital Economics' Paul Ashworth wrote in a client note following the report.
The Chicago Purchasing Manager's Index tanked and missed expectations in May. The index from the Institute of Supply Management fell to 46.2 from 52.3 in April, below expectations for 53. Philip Uglow, chief economist of MNI Indicators, said the plunge showed that weaknesses caused by bad weather and the West Coast port slowdown unexpectedly persist.
Consumer confidence beat expectations in May but fell from April. The University of Michigan's consumer confidence index rose to 90.7 from a preliminary reading of 88.6, falling from a 95.9 reading in April. Richard Curtin, chief economist for the report, said the drop showed consumers are cautiously optimistic that the economy will bounce back in the second quarter.
The count of US oil rigs fell yet again last week, by 13 to 646, the lowest level since August 13, 2010. Data from driller Baker Hughes showed that the tally of combined oil and gas rigs fell by 10 to 875, the lowest since January 31, 2003. Last week, the oil rig count fell by just one, the slowest pace in 24 weeks.
West Texas Intermediate crude oil prices climbed higher after the data. WTI rose as much as 4% to around $60.28 per barrel. Brent crude, the international benchmark, also jumped 4% to around $65.32. Earlier this week, the Department of Energy reported that US oil production surged to a 43-year high.
American Express president Ed Gilligan has died. According to a letter to employees from CEO Kenneth Chenault, Gilligan suddenly fell ill on a flight home to New York this morning. He was 55. He joined the company as an intern in 1980, and became president in April 2013.
Humana shares spiked as much as 18% after a report that it is considering a sale. The health insurance company has hired Goldman Sachs to advise it on a possible deal, according to the Wall Street Journal, citing sources familiar with the matter. Aetna and Cigna are among the companies that may reportedly be bidding for Humana.
Rosetta Stone said it has received an expression of interest from RDG Capital Fund Management. Its stock spiked more than 17%. The company makes the popular software for learning new languages. In a statement, the company said it will consider the offer carefully.
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