Stocks opened lower on Thursday after weekly jobless claims came in higher than expected. In the meantime, the economy contracted 5.5 percent, the Commerce Department said in its final reading on first-quarter GDP. That was a smaller contraction than the 5.7 percent initially reported. After a two-day meeting, the Fed said on Wednesday that the "pace of economic contraction is slowing" but that it "continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal-funds rate for an extended period." Read and listen to what the experts had to say...
Markets May Pause and See 10% Pullback
“The market has gone too far too fast relative to the pace of the lessening of the economic contraction,” said David Dietze of Point View Financial Services. “So we’re looking for a pause here, if not…a 10% pullback.” Longer term, he said investors should gradually move out of money markets.
Benign Fed Statement Asks for Calm
“Basically (the Fed) told us, ‘Guys, calm down, things are normalizing a bit’” said Christian Gattiker from Julius Baer. “There will be deflationary pressure, but nothing like an outright deflation around the corner or a high-inflation environment,” he said.
Don’t Listen to Economists!
Don't listen to the economists, said Roger Nightingale of Pointon York, saying none of them got it right during the downturn. He says corporates give a better gauge of the environment, and that they now say things are still very weak.
Oil Prices to Dip Again
The market rally is happening a bit to early and we’re going to get a correction before we have a steady rise that most people are expecting, said Simon Wardell of HIS Global Insight. “So we’d expect (oil) prices to pull back a bit, simply because we are running out of places to put oil, and we are not seeing signs of demand coming through yet,” he said.
Commercial Real Estate in Intensive Care Unit’
Real estate mogul Richard LeFrak of The LeFrak Organization, said the commercial real estate industry is “in intensive care unit right now,” but there are signs of hope with the slowly recovering economy. “The government has made an effort to restart the securitized financing industry,” he said. “We don’t know quite yet how this is going to play out, but it shows that there’s an effort on that behalf.”
Global Leader Dynamic is Changing
"Continental Europe is lagging," said Jim O'Neill of Goldman Sachs. "In many other places, the green shoots have blossomed into various different colored flowers. China and India are leading the world." He said he is concerned that the market is addicted to stimulus packages.
CNBC's Companies in the News:
- AIG Agrees To Spin Off Two Units, Cutting Debt to Fed
Bank of America