Volatility grips stocks after GDP data, earnings: Markets wrap

(Bloomberg) – Volatility took over US stocks on Thursday as investors suffered losses from big tech companies while new data showed the US economy rebounding in the third quarter.

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The S&P 500 rose after struggling for direction earlier in the session. The Nasdaq 100 fell. Technology losses affected stocks, with Meta Platforms Inc. falling. By as much as 25% as at least three investment banks downgraded stocks after disappointing earnings.

The dollar pared gains after data showed that US gross domestic product advanced for the first time this year. Treasury yields fell, with the 10-year interest rate dropping to less than 4% after fluctuating earlier in the session.

“It’s good, on the one hand, to see that the economy continues to grow and that should bode well for the stock market,” said Chris Zaccarelli, chief investment officer at CIA. “However, given that we are in the midst of an inflation battle, the Fed will likely feel that it needs to continue to take an aggressive stance in raising interest rates.”

The contraction in services and manufacturing, and a drop in new home sales showed that the Fed’s efforts to cool the economy appeared to be paying off. However, economists expect the Fed to rise by three-quarters of a percentage point for the fourth time in a row when it meets next week.

Zacarelli said a strong GDP reading could make the case for another rate hike in December, although some investors expect the Fed to slow the pace of tightening after its November meeting.

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More opinions on GDP data:

Steve Sosnick, Chief Strategist at Interactive Brokers

“There doesn’t seem to be enough in today’s data to dissuade the FOMC from doing anything unexpected at next week’s meeting. GDP data is pushing back the ‘imminent recession’ narrative, which means all eyes need to focus on inflationary trends at present “.

Richard Flynn, Managing Director of Charles Schwab UK

“Investors may take comfort from today’s better-than-expected GDP numbers. The announcement comes on the heels of strong September jobs data which shows that despite some pressure fractures below the surface, the labor market remains strong in terms of net jobs created. This has helped boost consumer spending. The downside is that credit card debt has increased, and savings rates have fallen due to inflation that persists.”

Stan Shipley, Economist at Evercore ISI

“Demands on the economy were good with real GDP rising more than expected +2.6% in Q3. GDP deflator advanced less than expected +4.1%. The inflation story is probably the most impactful part of this release. Attention will now shift to fourth-quarter activity. Despite the news of layoffs, initial jobless claims remained low. For now, the fixed income market is discounting the risks of a near-term recession.”

Earlier, the European Central Bank raised interest rates by 75 basis points – in line with expectations – and signaled further tightening ahead. The Stoxx Europe 600 fell after the decision while the Euro fell.

This week’s main events:

  • Bank of Japan policy decision, Friday

  • US personal income, personal spending, pending home sales, University of Michigan consumer confidence, Friday

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Some of the main movements in the markets:

Stores

  • The S&P 500 was up 0.5% as of 10:15 a.m. New York time

  • Nasdaq 100 index fell 0.4%.

  • The Dow Jones Industrial Average rose 1.5%

  • The Stoxx Europe 600 Index is down 0.3%.

  • The MSCI World Index was little changed

coins

  • The Bloomberg Spot Dollar Index is unchanged

  • The euro fell 0.5% to $1,0031

  • The British pound changed little at $1.1619

  • The Japanese yen rose 0.4% to 145.85 per dollar

Cryptocurrency

  • Bitcoin fell 0.3 percent to $2,0687.63

  • Ether rose 0.5% to $1,561.13

bonds

  • The yield on the 10-year Treasury fell four basis points to 3.97%.

  • Germany’s 10-year yield fell nine basis points to 2.02%

  • The UK 10-year bond yield fell four basis points to 3.53%.

goods

  • West Texas Intermediate crude rose 1.1% to $88.86 a barrel

  • Gold futures fell 0.2 percent to $1,665.70 an ounce

Assisted by Robert Brand, Elaine Chen, and Emily Gravio.

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