Still in business. (Photo by Alexi Rosenfeld/Getty Images)

US economy charges into the second half of the year

GDP grew at a 2.8% annual pace in Q2, much better than an expectation of 1.9%.

7/25/24 9:57AM

After a sluggish start to the year, the US economy showed a surprising burst of strength in the second quarter, as robust activity among businesses and consumers buttressed an ongoing stream of government spending.

The health of the US economy is of no small concern for the small capitalization stocks that are having a bit of a moment while the massive tech giants that were AI-driven darlings for most of 2024 hit a pothole. (Small caps tend to rely more on American revenues rather than sprawling global business empires.)

That dynamic continues to play out on Thursday, with key gauges of small caps like Russell 2000 (see the iShares Russell 2000 ETF and the S&P Small Cap 600 (easy to track via the S&P Core Small-Cap ETF) up tidily. Meanwhile, tech-heavy indexes like the SPDR S&P 500 ETF and Nasdaq 100 (Invesco QQQ Trust) are taking another leg lower amid a minor crisis of confidence about whether this whole AI thing that companies are spending so much money on may end up as what oil field roughnecks call a dry hole.

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eBay stock slumps on gloomy Q4 outlook despite solid Q3 earnings

Shares of eBay fell as much as 10.5% in premarket trading on Thursday morning after the company gave a lower-than-expected profit forecast for the important holiday shopping season.

The e-commerce giant reported solid numbers for the third quarter on Wednesday, with revenue up 9% as reported to $2.8 billion and gross merchandise volume rising 10% to $20.1 billion, topping the average analyst forecast of $19.4 billion, per Bloomberg.

However, concerns about the future somewhat overshadowed these results.

eBay outlined its profit outlook for the period ending in December to $1.31 to $1.36 a share, with revenue at $2.83 billion to $2.89 billion. According to Bloomberg-compiled data, this broadly matches Wall Street’s estimates for the top line, but misses on the bottom line, with analysts forecasting EPS to come in at $1.39 — suggesting the company expects some further margin pressure.

The company has been facing macroeconomic challenges since the US ended the de minimis tariff exemption in late August, with the online marketplace reliant on shipments. One small silver lining? CFO Peggy Alford highlighted a “less durable trend” on a post-earnings call: that as commodity prices for precious metals boomed, demand for bullion and collectible coins on eBay spiked.