The U.S. economy fared slightly better than initially thought in the second quarter, but the pace of growth remained too slow to shut the door on further monetary easing from the Federal Reserve.
Gross domestic product expanded at a 1.7 percent annual rate, the Commerce Department said on Wednesday as stronger export growth offset a pull-back in restocking by businesses wary of sluggish domestic demand.
That was up from the government’s initial estimate of 1.5 percent growth released last month and in line with economists’ expectations. The economy grew at a 2.0 percent pace in the January-March period.
The report also showed that after-tax corporate profits unexpectedly rose at a 1.1 percent rate after sinking 8.6 percent in the first quarter.
While the composition of economic activity was fairly favorable, growth remains well below the 2-2.5 percent rate required every quarter to hold the unemployment rate steady, which could compel policymakers at the U.S. central bank to offer additional stimulus at their September 12-13 meeting.
Hurricane Isaac pounded through southeastern Louisiana on Wednesday morning with 80 mph winds that sent water gushing over levees in marshy Plaquemines Parish and knocked out power to more than 400,000 homes and businesses.
The storm is moving at an agonizingly slow pace, meaning parts of the state may be pelted for 36 to 48 hours by heavy rains that could cause devastating floods. Power and rescue crews were standing by in some locations, waiting for driving rain and high winds to subside.
The European Central Bank must employ “exceptional measures” at times to fulfil its mandate of delivering stable prices, ECB President Mario Draghi wrote in an opinion piece on Wednesday aimed at calming German angst about the bank’s policy course.
The ECB is drawing up a new bond-buying plan to lower the borrowing costs facing Spain and Italy, which Draghi is expected to detail after a September 6 policy meeting. Germany’s Bundesbank—highly respected by German voters—opposes the plan.
Draghi wrote his opinion piece in German weekly Die Zeit after Bundesbank chief Jens Weidmann told magazine Der Spiegel the ECB bond-buying plan verged on the taboo for the bank of outright financing of governments.
Juergen Stark, a former ECB chief economist, piled on the German resistance in another newspaper interview on Tuesday, saying the ECB’s policy course meant it was being politicized and would ultimately no longer be able to deliver stable prices.
At 10 a.m. EDT, data on pending home sales for July are seen rising 1% after declining 1.4% in June.
European markets lost ground, with the Stoxx Europe 600 down 0.2% and on track for a third straight loss, as further comments from European Central Bank President Mario Draghi implying stimulus measures might be in the works failed to inspire investors.
Frontline’s second-quarter loss narrowed amid one-time gains as the oil tanker company’s operating expenses also declined. Shares slid 7.9% to $3.40 in premarket trading as results markedly missed Wall Street expectations.
Jos. A. Bank’s fiscal second-quarter profit climbed 13% as the men’s apparel retailer saw a double-digit revenue growth buoyed by its direct marketing sales, although margins narrowed amid rising input costs. Shares rose 11% to $46.30 in premarket trading as results comfortably beat Wall Street expectations.
Dycom’s fiscal fourth-quarter earnings rose 2.5%, but the telecommunications contractor’s results missed analyst expectations. Shares fell 15% to $16.10 in premarket trading.
Under pressure from investors unhappy with the health insurer’s performance and direction, WellPoint Inc. (WLP) Chief Executive Angela Braly resigned Tuesday, and the company’s board said it would begin a search for a permanent replacement. Shares rose 4% to $59.70 premarket.
Fresh Market Inc.’s (TFM) fiscal second-quarter earnings jumped 27% as the specialty grocer continued its streak of strong same-store sales growth, and also saw its margins widen. The results beat Wall Street expectations and the company raised its full-year outlook, sending shares 5% higher to $64.76 premarket.
Shares of online review site Yelp Inc. (YELP) fell 5% to $17.35 in premarket trading as 52.7 million shares will be freed up Wednesday, marking the end of a 180-day lockup period for early investors and insiders including Chairman Max Levchin and Chief Executive Jeremy Stoppelman, according to a filing with the Securities and Exchange Commission.
Joy Global Inc.’s (JOY) fiscal third-quarter earnings rose 12% as the mining equipment maker’s revenue and margins improved, but bookings continued to decline. Shares fell 2.2% to $51.90 in premarket trading as earnings missed Wall Street estimates and the company trimmed its full-year earnings and revenue outlook. Joy says weaker economic growth has slowed global demand for commodities and recent output increases have created surpluses that are depressing prices.
Genesco Inc. (GCO) swung to a fiscal second-quarter profit as the seller of hats and footwear posted stronger sales and fewer one-time charges. Shares rose 3.3% to $73.53 in premarket trading as the company also unveiled a new stock repurchase authorization and raised its outlook for the fiscal year.
Oppenheimer boosted its rating on Angie’s List Inc. (ANGI) to outperform from perform citing beliefs that the online review site can deliver multi-year EBITDA growth even if consumer marketing slows, and that volatility should ease now that time has passed since its lock-up expiration Aug. 14. Shares rose 4.8% to $9.46 premarket.
Chile’s Sociedad Quimica y Minera de Chile S.A. (SQM, SQM-B.SN), which produces specialty fertilizers, second-quarter earnings rose 45%, sending shares 2.4% higher to $61.40 premarket as results beat expectations.Watch list:
Standard & Poor’s Ratings Services placed Costco Wholesale Corp. (COST) on review for a potential upgrade, citing the wholesale-club operator’s strong profitability and debt-reduction efforts.
H.J. Heinz Co.’s (HNZ) fiscal first-quarter earnings rose 14% as the company benefited from reduced overhead expenses, improved margins and a lower effective tax rate, though negative currency impacts masked improvement in sales volume and pricing. The packaged-food company’s earnings beat expectations.
Sealed Air Corp.’s (SEE) Chief Executive William V. Hickey plans to retire from the plastic-packaging company in March, and Dow Chemical Co DOW -0.58%. (DOW) veteran Jerome A. Peribere was named as his successor.
Spectrum Pharmaceuticals Inc. (SPPI) said the Federal Trade Commission has cleared its acquisition of Allos Therapeutics Inc. (ALTH), a deal that will boost the company’s hematology franchise.
Standard & Poor’s Ratings Services placed its credit ratings for Washington Post Co WPO +1.07%. (WPO) on watch for a possible downgrade, noting the deterioration at the company’s higher education and newspaper divisions is expected to continue.