The Dow Jones Industrial Average rose Thursday after recent data showed the economy grew faster than expected and hinted at waning inflation.
The Dow climbed 286 points, or 0.9%. It traded up as much as 549 points earlier within the day. The S&P 500 was down 0.5%. The Nasdaq shed 1.5%, despite briefly trading positive earlier.
U.S. GDP increased increased at a 2.6% annualized pace for the period, against the Dow Jones estimate for two.3% growth. The report, the primary quarter of positive growth for 2022, eased investors’ concerns a couple of recession.
Along with showing stronger than expected growth, the GDP report provided at the least some excellent news on inflation. The chain-weighted price index, a cost-of-living measure that’s adjusted to reflect changing consumer behavior, rose 4.1% for the quarter, well below the 5.3% estimate. Headline inflation rose 4.2%, down sharply from 7.3%, in response to a gauge the Federal Reserve uses.
That offered hope for market observers searching for data indicating inflation was coming down, which could lead on the Federal Reserve to ease rate hikes after the November meeting, said Cliff Hodge, chief investment officer at Cornerstone Wealth. Bond yields also pulled back following the discharge of the information.
“The GDP release this morning was a goldilocks number for risk assets,” said Hodge, who specifically noted the value index data. “That is one other sign pointing to the likelihood that the worst of inflation could also be behind us.”
The technology sector continued its recent woes – in turn weighing down the Nasdaq – as shares of the Facebook parent company plummeted 29.7% on a weak fourth-quarter forecast and disappointing third-quarter earnings Wednesday. The corporate also said it could lose even more cash next yr constructing out the metaverse. The report led to several analysts downgrading the stock.
Traders also pored over earnings reports from other corporations, a few of which performed higher than tech has this week. McDonald’s shares traded up 3.4% after the fast-food giant beat expectations before the bell. But cigarette company Altria Group shed 1.2% after missing expectations on earnings per share and revenue.
Big tech earnings proceed Thursday with results from Amazon and Apple.
Correction: The Dow was up as much as 549 points. A previous version misstated the number.
