Stock exchange traded funds (ETFs) opened modestly lower on Thursday after reports showed the U.S. economy grew less than expected in the first quarter and unemployment claims surged higher.
- U.S. economic growth slowed sharply in the first quarter to a 1.8 percent pace as governments slashed spending, the Commerce Department said Thursday. After the growth hummed at a 3.1 percent pace in the fourth quarter of 2010, the department’s first estimate for the January-March period showed weakness in the recovery from the 2008-2009 recession. A 7.9 percent cut in federal government spending, and a 3.3 percent cut in spending by local authorities, were factors in the slowdown. Also contributing was the sharp rise in fuel and food commodity prices, which slowed personal consumption growth to 2.7 percent from a 4.0 percent pace in the previous quarter. The iShares Barclays 20+ Year Treasury ETF (NYSEArca: TLT) is moderately higher early Thursday.
- New claims for US unemployment insurance benefits surged more than expected last week to the highest level since January, official data showed Thursday. The Labor Department reported initial jobless claims rose to a seasonally adjusted 429,000 in the week ending April 23. That was sharply higher than the average analyst estimate of 390,000. The Labor Department revised slightly upward the prior week’s claims number to 404,000. The four-week moving average, which helps to smooth volatility, was 408,500 claims, an increase of 9,250 from the prior week. The average had been below the 400,000 threshold for eight consecutive weeks. The Consumer Select Sector SPDR ETF (NYSEArca: XLY) is showing early gains on Thursday.
- The U.S. dollar trimmed losses but remained under pressure Thursday, after a pair of reports showed weekly jobless claims unexpectedly jumped and the U.S. economy grew at a slower pace in the first quarter. The greenback fell to a 21-month low before the data, which reinforced sentiment from Wednesday after Federal Reserve Chairman Ben Bernanke gave investors no reason to believe U.S. interest rates are headed higher anytime soon. The dollar index which measures the U.S. currency against a basket of six major currencies, slipped to 73.246, down from 73.284 late Wednesday. Earlier Thursday, the gauge fell to 72.871, its lowest level since July 2008. The CurrencyShares Euro Trust ETF (NYSEArca: FXE) is slightly higher so far today.
Gregory A. Clay contributed to this article.
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