US shares mixed after soft GDP report, oil rises

NEW YORK: US stocks were mixed, Treasuries dropped and oil closed in on $50 a barrel after the world’s biggest economy reported its slowest pace of expansion in three years.

Global equities were flat, trimming a sixth straight monthly advance, as geopolitical concerns linger. The Nasdaq 100 Stock Index added to its record high as Alphabet Inc. and Amazon.com Inc. rose after reporting strong earnings following Thursday’s close. In Europe, equities pared a third monthly gain as Barclays Plc dropped the most since November and became the latest bank in the region with trading results to lag those of American firms.

“Overall, a soft report, but the Treasury market has sold off and we’ll argue that the market was simply looking for an ever weaker report,” BMO Capital Markets strategist Ian Lyngen wrote in research note after the GDP figures were released.

Bond traders also are looking at the Bureau of Labour Statistics employment cost index, which climbed 8 per cent in the first quarter, its largest gain since 2007 and a sign that wage growth is accelerating. This builds on data from Europe showing higher than expected price growth in April.

“The inflation data is more important than the miss in other components,” Anthony Cronin, a trader in New York at Societe Generale SA, wrote in an email. “It puts more pressure on the Fed and comes on the back of the strong European CPI print this morning.”

In addition, markets are in a state of flux as President Donald Trump fights an uphill legislative battle to turn his words into action and kept concerns over North Korea alive. The administration’s tax-cut plan and mixed signals on its view of NAFTA stirred markets this week. The growth slowdown will cast doubt on the Federal Reserve’s resolve to raise interest rates two more times this year.

Now, eyes turn to Congress, which is considering a continuing resolution to avoid a government shutdown.