- US economic growth accelerates in Q3
- Growth stocks outperform value
- ServiceNow dips after deal to buy Armis
- Indexes up: Dow 0.16%, S&P 500 0.46%, Nasdaq 0.57%
NEW YORK, (Reuters) - U.S. stocks rose on Tuesday and the S&P 500 notched a closing record after a flurry of economic data that included a reading of economic growth pushed bond yields higher and elevated growth names.
The Commerce Department said gross domestic product increased at a 4.3% annualized rate in the third quarter, the fastest pace since the third quarter of 2023 and well above the 3.3% estimate of economists polled by Reuters, fueled by robust consumer spending.
While the data was delayed due to the 43-day government shutdown and many analysts expected the fourth quarter would show a slower pace of economic growth, markets are now pricing in a smaller chance of a January rate cut from the Federal Reserve, according to CME's FedWatch Tool, and shorter-dated bond yields rose.
"The bond market didn't like this news," said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco.
"It seems to me that when we lose this battle, growth does well, and growth's doing well today... but if you're a food company, or you're a chemical company, or you're an oil and gas company, or even if you're like a private credit company, that's bad news. Unless interest rates go down, it's bad."
While the data was delayed due to the 43-day government shutdown and many analysts expected the fourth quarter would show a slower pace of economic growth, markets are now pricing in a smaller chance of a January rate cut from the Federal Reserve, according to CME's FedWatch Tool, and shorter-dated bond yields rose.
"The bond market didn't like this news," said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco.
"It seems to me that when we lose this battle, growth does well, and growth's doing well today... but if you're a food company, or you're a chemical company, or you're an oil and gas company, or even if you're like a private credit company, that's bad news. Unless interest rates go down, it's bad."
All three main indexes were poised for a third straight yearly gain. The S&P 500 and the Dow were also on track to rise for an eighth consecutive month.
Recent gains in U.S. stocks have spurred hopes of a "Santa Claus rally", a seasonal phenomenon where the S&P 500 posts gains in the last five trading days of the year and the first two in January, according to Stock Trader's Almanac.
This year, that period begins on Wednesday and runs through January 5.
Trading volumes were light and likely to thin out further as the holiday approaches. U.S. stock markets will close at 1 p.m. ET (1800 GMT) on Wednesday and remain shut on Thursday for Christmas.
Volume on U.S. exchanges was 14.01 billion shares, compared with the 16.67 billion average for the full session over the last 20 trading days.
ServiceNow declined 1.5% after the enterprise software maker agreed to buy cybersecurity startup Armis for $7.75 billion in cash.
U.S. military shipbuilder Huntington Ingalls edged up 0.3% after President Donald Trump announced plans for a new "Trump class" of battleships, which he said would be larger, faster and "100 times more powerful" than any previously built.
Miner Freeport-McMoRan climbed 2.5% and closed at a 15-month high of $52.29 as copper prices touched a record high and Wells Fargo raised its price target on the stock.
Declining issues outnumbered advancers by a 1.02-to-1 ratio on the NYSE and by a 1.6-to-1 ratio on the Nasdaq.
The S&P 500 posted 35 new 52-week highs and five new lows while the Nasdaq Composite recorded 70 new highs and 178 new lows.
Reporting by Chuck Mikolajczak; additional reporting by Sruthi Shankar and Shashwat Chauhan in Bengaluru; Editing by Shilpi Majumdar, Shinjini Ganguli and David Gregorio
Source: Reuters