Major stock market indexes hit fresh highs on Wednesday, as improved U.S. economic growth in the third quarter, solid consumer spending last month and renewed optimism on Wall Street over a trade deal with China have all dampened fears of a recession.
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- The S&P 500 was up 0.27% while the Dow Jones Industrial Average rallied 0.19%, helping both indexes continue a record-setting run that has seen several new highs over the past month.
- Much of the market optimism was due to stronger-than-forecast economic data, suggesting that the economy will continue its moderate pace of expansion in the fourth quarter.
- The latest indicators showed that U.S. GDP grew by 2.1% in the third quarter—up from a previous reading of 1.9%—and also indicated that the slowdown in business investment could be stabilizing.
- Economic prospects were further improved by a rise in U.S. consumer spending last month, while the number of Americans filing unemployment claims also fell, helping further diminish recession risks in the short term.
- The robust economic data added to rising optimism on a trade deal with China, thanks to Trump’s comments on Tuesday that the U.S. was in the “final throes” of the important phase one agreement.
- To add to the market’s recent rally, third-quarter corporate earnings have come in better than expected: Of the 484 companies in the S&P 500 that have reported earnings, 75% have beaten estimates, compared to 18% that have missed, according to Refinitiv data (in a typical quarter, only 65% of companies beat estimates and 20% miss expectations).