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Fed upgrades Q3 GDP, but the devil is in the details

Yesterday, the Fed upgraded its outlook for the U.S. economy and said it could hike rates sooner, depending on how closely the economic data improves.

That's why everyone was watching today's first look at Q3 GDP. The headline number was stronger than expected at 3.5 percent. But below the hood, business and real estate investment and personal consumption dropped.

Read MoreUS shows torrid growth, boosted by defense, trade

If the consumer, business investment and housing were weaker, where was the strength? Government spending was stronger than expected, due largely to national defense expenditures.

The bottom line: third quarter growth was stronger than expected, but the composition of the growth wasn't what we were be hoping for. The Fed, I would think, wants to see a broader participation in the economic recovery. You want to see more contribution from personal spending and business in the economy.

Elsewhere:

1) A country western singer was outside the New York Stock Exchange early this morning to promote the IPO of western apparel retailer Boot Barn Holdings (symbol "BOOT"). The company priced five million shares at $16, at the high end of its $14 to $16 range.

It's only an $80 million deal, but it's the kind of focused deal that investors like. Boot Barn operates 158 stores that sell western footwear and apparel and boasts a two-million-strong base of loyalty reward members. And remember, in a world of slow or no growth, investors have been willing to pay up for growth. Boot Barn projected unit growth of 10 percent and earnings growth of 20 percent, according to Renaissance Capital.

The stock market debut is also backed by the private equity firm Freeman Spogli, which was also behind the successful El Pollo Loco IPO. Shares of the Mexican-style restaurant chain are up 130 since its inception.

2) Energy company earnings:

ConocoPhillips reported earnings above expectations, but earnings were down 12 percent from the year-ago period and 20 percent sequentially.The Street is likely to focus on a cut in Q4 production guidance. ConocoPhillips is one of the few exploration and production firms that have cut their outlook, and the Street is likely to focus on the downward revision in fourth-quarter production guidance. However, the major project guidance seems to be on track and the growth target of 3 to 5 percent volume growth is unchanged.

Oil services firm National Oilwell Varco beat estimates, though rig orders were below expectations. The rig business is roughly 50 percent of revenues. CEO Clay Williams said the company is closely monitoring the potential impact of lower oil prices on its markets.

Murphy Oil also reported earnings better than expected, but acknowledged the impact of lower oil prices, saying earnings "were negatively impacted in the 2014 quarter compared to the prior year due to lower average realized oil sales prices of near $9.00 per barrel."

  • Bob Pisani

    A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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