By the final hour of trading, stocks were nearly flat, with the S&P 500 down by more than 1% for the week.
Crude oil had a huge day. West Texas Intermediate crude futures in New York jumped 6% to as high as $39.84 per barrel, following an unexpected drop in inventories last week.
First, the scoreboard:
- Dow: 17,565.18, +23.22, (0.13%)
- S&P 500: 2,046.11, +4.20, (0.21%)
- Nasdaq: 4,847.34, -1.03, (-0.02%)
- WTI crude oil: $39.72, +$2.46, +6.60%
Flat Q1 growth?
It's looking more and more like economic growth was almost flat in the first quarter.
The Commerce Department published February wholesale inventories and a revision to January. It said inventories fell by a more-than-expected 0.5% in February, and January's print was revised sharply lower to -0.2% from 0.3%.
These numbers had economists everywhere cutting their estimates for first-quarter growth.
Deutsche Bank chief economist Peter Hooper explained in a recent note that the ratio of private inventories to final sales surged late last year to a six-year high.
But if this ratio drops without a meaningful rise in final sales, it could be a big drag that removes as much as one percentage point from GDP growth, he said.
Most prominently, the Atlanta Fed's GDPNow tracker cut its forecast to 0.1% from 0.4%.
Now, there are many reasons to pay attention to this tracker, including the fact that it was virtually the only one to nail the print for Q1 2015. So here we are again.
JP Morgan economist Daniel Silver lowered his estimate for Q1 GDP to 0.2%, with inventories expected to subtract 0.6 percentage points from growth.
Also, Barclays lowered its forecast to 0.3% from 0.4%, and Goldman cut its estimate to 0.9% from 1.2%.
Now before the doomsayers get all excited, we'd caution that the advance GDP print (due April 28) will be revised three times within one month.
The advance estimate of Q4 GDP was 0.7% in January. The final print in March was 1.4%.
So stay tuned.
Marriott/Starwood
Marriott International and Starwood Hotels shareholders have said "yes" to each other.
They voted in favor of their merger that would create the world's largest hotel chain.
Marriott is paying $12.4 billion to buy Starwood. Shareholders will get 0.8 shares of Marriott common stock and $21.00 in cash.
Their union was almost interrupted by the Chinese insurance giant Anbang, who tried to outbid Marriott for Starwood.
Starwood CEO Thomas Mangas said in a press release: "Today's vote is a significant step toward closing, and we are grateful for the continued enthusiasm and support for this merger. There is no doubt that this transaction puts our company on the best path forward and we remain excited about the opportunity this combination will create for our stockholders, associates, owners and guests."
Fedspeak
It was a busy week for Fedspeak.
Notably, Fed chair Janet Yellen shared a stage with predecessors Ben Bernanke and Paul Volcker in New York on Thursday. Alan Greenspan was also in the room, via teleconference screens.
We didn't hear much that was brand new from the Fed chair. She restated her optimism about the US economy, and the need to continue to be cautious with raising interest rates.
But she took the chance to respond to Republican presidential frontrunner Donald Trump, who said the Fed helped create asset bubbles.
"I certainly wouldn't describe this as a bubble economy," Yellen said, according to Reuters.
Volcker added that he saw some parts of the financial system that were "overextended", but he didn't think the whole thing was in a bubble.
On Friday, we heard from William Dudley, New York Fed president.
Again, it was partly a rehashing of the Fed's main talking points du jour; he thinks the Fed should proceed slowly because there are more instruments to tighten monetary policy than there are to loosen.
But he thinks inflation will miss the Fed's 2% target, and said low commodity prices may be a sign of "more persistent disinflationry pressures" than he currently expects.
Additionally:
Lloyd Blankfein thinks negative rates are not the 'new normal' and more from Goldman's annual letter
SoulCycle's founders have resigned. The company filed to go public in July