The Dow Jones Industrial Average surged Thursday after new data showed the economy grew faster than expected and hinted at waning inflation.
The Dow climbed 400 points, or 1.3%, hanging on to a chunk of its early 559-point gain. The S&P 500 was up 0.1%. The Nasdaq shed 0.9%, despite briefly trading positive earlier in the day.
U.S. GDP increased increased at a 2.6% annualized pace for the period, against the Dow Jones estimate for 2.3% growth. The report, the first quarter of positive growth for 2022, eased investors’ concerns about a recession.
In addition to showing stronger than expected growth, the GDP report provided at least some good news on inflation. The chain-weighted price index, a cost-of-living measure that is 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%, according to a gauge the Federal Reserve uses.
That offered hope for market observers looking for data indicating inflation was coming down, which could lead 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 release of the data.
“The GDP release this morning was a goldilocks number for risk assets,” said Hodge, who specifically noted the price index data. “This is another sign pointing to the likelihood that the worst of inflation may be behind us.”
The technology sector…
