Economic growth slows, Chevron (CVX) reports fourth-quarter and MasterCard (MA) outperforms

Markets wavered on Friday morning after U.S. economic growth slowed in the fourth-quarter. The Commerce Department reported that the gross domestic product expanded at 2.6% percent annual pace. This data followed a 5% rate for the third-quarter. Many are expecting this slowdown to only be temporary, given the sinking gasoline prices. Gennadiy Goldberg, an economist at TD Securities, said, “We look for strong domestic consumption to continue supporting growth momentum in the coming quarters even as investment suffers due to falling oil prices.” Even though the fourth-quarter data slowed, it still surpassed the healthy 2.5% pace. Economists were projecting a 3% growth.

Shares of Chevron Corporation (CVX) were falling slightly after the company reported their fourth-quarter results. The oil-producing giant reported that fourth-quarter net income came in at $3.47 billion, or $1.85 per share, down from the $4.93 billion, or $2.57 per share a year earlier. Analysts were expecting earnings of $1.63 per share. The drastic drop in oil prices has caused many oil companies’ to decrease spending budgets. Chevron said that they would be cutting their spending budget by $15 billion over the next three years. They also cut their 2015 capital budget by 13% to $35 billion. Chief Executive Office John Watson, said, “We enter 2015 with the financial strength to meet the challenges of a volatile crude price environment and with significant efforts under way to manage to lower a cost structure.”

Shares of MasterCard Incorporated (MA) were jumping up over 2.3% after the company beat analysts’ expectations. Net income was up to $801 million, or 69 cents per share. Which was up from the $623 million, or 52 cents per share this time last year. Net revenue was up 14% to $2.42 billion. Analysts were projecting earnings of 62 cents per share on revenue of $2.39 billion. The company reported that their worldwide purchasing volume was up 12.1% to $858 billion. Chief executive, Ajay Banga, said, “Despite a mixed global economy, we delivered solid results for the quarter and for the full year in 2014.”

That’s all for today,

Warren Gates, Normandy Research 

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