The Dow Jones Industrial Average closed higher on Thursday after new data showed third-quarter GDP rose faster than expected and hinted at lower inflation, encouraging investors to buy stocks linked to the health of the economy.
The Dow Jones climbed 194.17 points, or 0.6%, to end at 32,033.28 for its fifth day of victories. Shares of Caterpillar, McDonald’s and Honeywell led the 30-stock index higher after the companies reported better-than-expected earnings. The Dow Jones traded up 549 points during the day.
The S&P 500 closed down 0.6%, ending the session at 3,807.30. The Nasdaq Composite lost 1.6%, closing at 10,792.67, as a rout in Meta and other tech stocks weighed on the index.
The American economy grew at an annualized rate of 2.6% for the period, compared to the Dow Jones estimate for growth of 2.3%, according to the Bureau of Economic Analysis report. The chain-weighted price index, a measure of the cost of living that is adjusted to reflect changing consumer behavior, rose 4.1% for the quarter, well below the estimate of 5, 3%. Headline inflation rose to 4.2%, down sharply from 7.3%, according to a gauge used by the Federal Reserve.
That gave hope to market watchers looking for data indicating that inflation was falling, which could lead the Federal Reserve to ease rate hikes after the November meeting, said Cliff Hodge, director. investments at Cornerstone Wealth. Bond yields also fell after the data release.
“The GDP release this morning was a golden number for risk assets,” said Hodge, who specifically noted the price index data. “This is another sign indicating the likelihood that the worst of inflation is behind us.”
Still, the tech sector continued its recent woes, dampening the broader stock market. Meta shares fell 24.6% on a weak forecast for the fourth quarter and disappointing third-quarter results on Wednesday. The company also said it will lose even more money next year building the Metaverse. The report led several analysts to downgrade the stock.
Correction: the Dow gained up to 549 points. A previous version misstated the number.