US stocks reach new peaks as investors digest US GDP
Traders work on the floor at the New York Stock Exchange in New York, Thursday, Jan. 2, 2025. (AP Photo/Seth Wenig)
NEW YORK, United States — Two of major US stock indexes closed at record highs Thursday. An upward revision to second-quarter US GDP data and strong earnings from AI chip giant Nvidia lifted the indexes.
The Dow Jones Industrial Average rose 0.16 percent to a record 45,636.9. The broad-based S&P 500 Index gained 0.32 percent to 6,501.86, also a record. The Nasdaq Composite Index added 0.53 percent to 21,705.16.
The United States saw its gross domestic product grow at an annualized rate of 3.3 percent in the second quarter, according to Thursday’s official update. This was higher than previously calculated and above market expectations.
The initial GDP estimate published in late July showed annualized growth of 3 percent. Meanwhile investors had expected a revision to only 3.1 percent.
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The upward revision mainly reflected improvements in investment and consumer spending, the Commerce Department said.
Growth was also bolstered by a decline in US imports, which are subtracted from GDP calculations. This drop occurred as businesses pulled back on shipments after rushing to stock up ahead of President Donald Trump’s tariff hikes.
Markets are anticipating a potential Federal Reserve rate cut at its September meeting, which could stimulate economic activity.
The market “is waiting a little bit to get some more information feeding into Fed decisions,” including next week’s job numbers, Victoria Fernandez of Crossmark Global Investments told AFP.
“After the initial release, there were concerns that the domestic economy was slowing quite sharply,” said Richard Flax, chief investment officer at Moneyfarm. “But these latest data suggest that the economy is a bit stronger than initially feared.”
Attention shifts to inflation
The focus now shifts to Friday’s release of a key inflation reading and its potential impact on the outlook for additional rate cuts.
Despite the positive market sentiment, Nvidia shares fell 0.82 percent, adding to recent declines. This, even after posting a profit of $26.4 billion on record revenue of $46.7 billion in the second quarter.
Investors had keenly awaited Wednesday’s earnings update from the California-based firm. Its remarkable growth has driven strong gains for tech stocks in recent months.
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The earnings report comes amid market concerns over a potential spending bubble in the artificial intelligence sector. This could hurt the chip giant’s prospects.
In Europe, the Paris stock market extended its recovery after tumbling early in the week This was on fears that France’s minority government could be toppled.
Prime Minister François Bayrou had proposed a confidence vote over his budget cuts.
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France’s borrowing costs have soared since the vote was called Monday, as the government struggles to find around 44 billion euros ($51 billion) in savings.
