Stocks jumped higher out of the gate thanks to a better-than-expected reading on the economy. However, the excitement faded throughout the session as investors took in the latest Beige Book and turned to tomorrow's key inflation update.
In economic news, data from the Bureau of Economic Analysis showed the U.S. economy grew at a faster pace than previously thought in the third quarter. Specifically, Q3 gross domestic product (GDP) came in at 5.2% vs the initial 4.9% estimate. However, the data also showed that consumer spending wasn't as robust as in the first reading.
"The numbers over the past several weeks have suggested the economy is slowing," says Chris Larkin, managing director of trading and investing at E*TRADE from Morgan Stanley. "Today's upward revision to an already strong Q3 GDP reading flies in the face of that cooling trend." However, Larkin doesn't believe this will cause the Fed to raise interest rates at its December meeting.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The Fed's Beige Book was also released today, and it showed declines in economic conditions in half of the central bank's 12 districts between October 6 and November 17. "Obviously a more somber report than the GDP numbers we saw this morning," says Alex McGrath, chief investment officer for NorthEnd Private Wealth. "Based on these readings, it would appear that we have already entered a mild recession that many have been predicting for a year," even as it runs counter to other data we've seen.
Next up is tomorrow morning's release of the October Personal Consumption and Expenditures (PCE) index, the Fed's preferred measure of inflation that tracks consumer spending. Earlier this month, both the Consumer Price Index (CPI) and Producer Price Index (PPI) showed inflation eased in October.
GM stock pops on dividend hike, stock buyback news
As for individual equities, General Motors (GM) stock soared 9.4% today after the automaker disclosed several shareholder-friendly initiatives. In addition to a 33% dividend hike, GM said its board of directors approved a $10 billion stock buyback program. The company also reinstated the full-year guidance it initially pulled ahead of the United Auto Workers (UAW) strike.
Still, CFRA Research analyst Garrett Nelson maintained a Hold rating on the consumer discretionary stock. While this news "will certainly be received positively, we think caution is warranted given uncertainty regarding GM's longer-term plans related to EVs and the Cruise division plus its less competitive labor cost position," Nelson writes in a note to clients.
As for the main indexes, they were mixed by the time the closing bell rang. The Nasdaq Composite finished down 0.2% at 14,258, the S&P 500 was 0.09% lower at 4,550, and the Dow Jones Industrial Average added 0.4% to 35,430.
Meme stock buzz builds as GameStop rallies
Elsewhere on Wall Street, murmurs of another meme stock craze are building following a two-day return of 36.4% for GameStop (GME). A report by Reuters indicates the bulk of the buying is coming from retail traders, with the video game retailer trending on at least one investing-related social media site.
You may remember the insane share-price moves retail traders sparked in GME and others in early 2021, looking to squeeze short sellers who had bet against the stocks.
"Heavily shorted GameStop came to the attention of the hordes of mostly young, mostly male day traders who congregate at WallStreetBets," wrote Dan Burrows, senior investing writer at Kiplinger.com, at the time. "The online community of 6 million members likes to take wild gambles with their money."
Ahead of the company's third-quarter earnings report, due out after next Wednesday's close, GME stock finds itself heavily shorted again. Nearly a fifth of GameStop's shares outstanding are currently sold short, according to YCharts.
Related content
- When Is the Next CPI Report?
- Your Backup Gmail Account Could Disappear This Week
- How Charlie Munger Helped Create Berkshire Hathaway, and Warren Buffett
-
An End-of-Year Investing ChecklistDecember is a great time to get your portfolios in order. Investors can follow this checklist to assess what changes they may or may not need to make.
-
Year-End RMDs: Should You Invest, Spend or Donate Them?Here are 10 ways to use year-end RMDs strategically. The deadline for taking Required Minimum Distributions is December 31. And yes, shopping might be in order.
-
Stock Market Today: Broadcom Earnings Boost the NasdaqBroadcom became the latest member of the $1 trillion market-cap club after its quarterly results, while RH also rallied on earnings.
-
Stock Market Today: Dow Logs Longest Losing Streak Since AprilThe November Producer Price Index showed that inflation remains a tough beast to tame.
-
Stock Market Today: Tech Stocks Rally as CPI Supports Lower RatesAn inline inflation report sealed the deal for a December rate cut and sent the tech sector soaring.
-
Stock Market Today: Stocks Shrink From Highs as CPI LoomsThe Nasdaq hit a new record early Tuesday but drifted lower into the closing bell.
-
Stock Market Today: Markets Reflect Global UncertaintyExuberance fades as investors confront micro challenges and a murkier macro environment.
-
Stock Market Today: Nasdaq Nabs New High After Jobs DataThe S&P 500 also closed at its highest level ever, while the Dow Jones Industrial Average was pressured by another down day for UnitedHealth stock.
-
Rebound in Jobs Growth Keeps Fed on Track: What the Experts Are SayingJobs Report No nasty surprises in the November payrolls data leaves a quarter-point cut in play.
-
Stock Market Today: Stocks Pause Near Highs Ahead of Jobs FridayInvestors await a key data set with sentiment still broadly positive.
