Industrial and transportation companies experienced a decline in their shares as traders assessed the implications of unexpectedly strong U.S. economic data.
According to the Commerce Department, the gross domestic product (GDP) witnessed a 2.4% annual growth rate in the second quarter once seasonally and inflation-adjusted. This positive outcome supports the predictions made by various sectors, including the industrial sector, that the Federal Reserve will achieve a successful “soft landing.”
Economists believe that the Federal Reserve managed to control inflation without triggering a major recession. The surge in orders for durable goods, intended to last for three years or more, increased by 4.7% in June mainly due to the substantial influx of orders for Boeing passenger planes. The strategists at brokerage Goldman Sachs Group express their belief that the upcoming hike will be the last of this cycle, stating that Federal Reserve Chair Jerome Powell mentioned a strong emphasis on inflation data. They also anticipate soft Consumer Price Index (CPI) reports in the coming months.
Railroad company Norfolk Southern has raised its cost estimate associated with the train derailment in East Palestine, Ohio, to a staggering $803 million. This adjustment significantly impacted its profit during the second quarter.
On the other hand, Lennox International observed a rise in its shares as the manufacturer of HVAC and refrigeration equipment witnessed notable growth in sales to commercial clients. This improvement can be attributed to the resolution of supply-chain log-jams.
In conclusion, the industrial and transportation sectors faced challenges following the release of robust U.S. economic data. While some companies experienced a decline in shares due to specific circumstances like train derailments, others witnessed positive developments as issues regarding supply-chain bottlenecks were resolved.
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