Strong growth in the nation's gross domestic product spooked investors and sent stocks mostly lower Wednesday as the data renewed fears...
NEW YORK — Strong growth in the nation’s gross domestic product spooked investors and sent stocks mostly lower Wednesday as the data renewed fears that the Federal Reserve would continue raising interest rates. Despite the drop, the market ended November with impressive gains.
The Dow Jones industrial average fell 82.29 to 10,805.87.
Microsoft, one of the 30 Dow stocks, ended the day unchanged at $27.68 a share. Boeing, also a Dow stock, fell 94 cents to $68.19.
Broader stock indicators were mixed. The Standard & Poor’s 500 index lost 8.00 to 1,249.48, and the Nasdaq composite index rose 0.11 to 2,232.82.
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Wall Street endured a third day of flat-to-lower trading despite a recent string of government reports that have painted an uplifting picture of the economy. The Commerce Department said the first revision to gross domestic product (GDP) for the July-September quarter shows the economy rose at a 4.3 percent annual rate, which reinforced the economy’s ability to handle record energy prices following hurricanes Katrina and Rita.
Separately, a Federal Reserve report suggested the economy exhibited solid momentum in October and much of November, too.
Manufacturing, retail sales and hiring improved in many regions, the Fed said. However, while remaining healthy, housing activity slowed in many markets including the West; demand for home mortgages eased in some areas. The Fed’s observations added to other signs of a gradual cooling of the hot housing market.
The latest GDP figure, driven by growth in personal spending and business investment, was revised from a preliminary reading of 3.8 percent, and beat economists’ forecast of 4 percent growth and a 3.3 percent advance in the prior quarter.
While the Fed has signaled it might stop rate hikes should the economy weaken, the strong economic data is likely to prompt more rate increases, giving the markets pause after reaching 4 ½-year highs last week. But analysts said there is still room for stocks to advance.
“We’ve had a great four- to six-week run, and now the economic data has been far better than expected,” said Jack Caffrey, equity strategist for J.P. Morgan Private Bank. “So at this point, seeing the market consolidate here makes perfect sense.”
With crude-oil futures off of their summer highs and economic data improving, Wall Street enjoyed stellar gains in November. For the month, the Dow gained 3.5 percent, the S&P rose 3.52 percent and the Nasdaq surged 5.31 percent.
With a month to go, the market is still well positioned to end the year in positive territory. For the year to date, the Dow is up 0.21 percent, the S&P has gained 3.1 percent and the Nasdaq has risen 2.64 percent.