Ahead of the opening bell today, the second read on Q3 GDP was released, and results were even better than the last time around. Growth of 3.2% pushed past the 3% threshold from 2.9% in the first installment. This is the back-half growth analysts had been looking toward since calendar year 2016 got off to such a rocky start for the second straight year.
Where do we note improvements from the first read? Consumption rose 2.8% from the initial 2.1% figure. Corporate profits were even bigger at +7.6%; previously this number was -1.9%. With oil prices leveling out at still-profitable rates from the precipitous lows in recent years, this helped the wide swath of industries affected either directly or indirectly by oil and gas prices.
Speaking of oil prices, the highly anticipated OPEC meeting taking place this week is already beginning to wobble. Whereas market participants had all but priced in an agreement after the oil-producing consortium met last time, expectations of an agreement to freeze or cut online supply in the near term look dicey. Hopes earlier had been for a million-barrels-per-day cut, resting largely upon an agreement between geopolitical rivals Saudi Arabia and Iran, but that appears to be a pipe(line) dream at this point.
While not an OPEC member, Russia’s Energy Minister has announced he will not attend Wednesday’s meeting as planned. One of the world’s top oil producers, Russia says it will only discuss curbing its own output once OPEC reaches a deal first.
WTI and Brent crude price indices are currently down 3.7% in this morning’s pre-market. Oil traders have brought both levels back from the high-$40s, and are paying close attention to what happens as the OPEC meeting concludes. Among the biggest fears is that the Saudis may flood the market into an already-oversupplied glut, which would likely send the price of a barrel of oil into free fall. And we know from recent experience what that can mean for the overall stock market, and it ain’t pretty.
The S&P 500, Dow and Nasdaq are flatlining in aggregate at this hour. This follows a half-point sell-off in the Dow and Nasdaq yesterday.