Big Tech's Big Day

By Nicholas Jasinski |  Thursday, July 30

Waiting for Big Tech. Today began with a pair of economic-data releases, one backward looking and the other more current. The former was the Commerce Department's first swing at second-quarter U.S. gross domestic product, which it will adjust in the coming months. Likely not a surprise to many, the initial reading was ugly: The U.S. economy shrank at a 32.9% annualized rate from April through June. It's a small victory, but that was actually slightly better than what economists had forecast.

And the number does look a bit scarier than the reality. Because it's an annualized rate, it indicates what would happen to the U.S. economy if conditions continued at their second-quarter level for the entire year.

"Investors can divide the figure by four for a rough translation of the annual number back to a quarterly figure, leaving the second-quarter decline on a quarterly basis at something like 9%," wrote Lisa Beilfuss today.

Luckily for all Americans, the period of peak stay-at-home orders, layoffs, and businesses shutting down to adjust operations to a pandemic is behind us, and the full-year 2020 GDP decline is going to be much less dramatic. Lisa has more on second-quarter GDP and its components here.

The next economic-data release this morning was the Department of Labor's initial jobless claims for the week ending on July 25. That's a much more current look at which way the U.S. economy is trending—and it wasn't great. For the second week in a row, initial claims rose. They had been steadily declining since March.

Last week, 1.43 million Americans filed for unemployment insurance for the first time. It's a sign that the rebound in the labor market has stalled as reimposed limits on some forms of economic activity in coronavirus-hot spot states is leading to new layoffs. That's just as enhanced unemployment insurance benefits from the federal government are expiring, without a new fiscal package to extend or replace them yet in place.

Seeing roughly 32 million unemployed Americans potentially lose a major chunk of their income support is a top concern for many economists looking at third-quarter GDP and the longer-term recovery.

Stocks opened down and drifted higher through the session, thanks to strong earnings reports from a few chip makers including Qualcomm and other companies like UPS. The Dow Jones Industrial Average finished the day down 226 points, or 0.9%, and after having been down more than 500 points in the morning. The S&P 500 lost 0.4%, also well off its morning lows, while the Nasdaq Composite eked out a 0.4% gain, reversing earlier losses.

The most-awaited second-quarter results came after the closing bell today. More on that below.