The stock markets in the United States declined today, driven by speculations that the Federal Reserve might taper its $85 billion bond-buying program after data showed that the economy is growing faster than the expected.
The growth rate of the U.S. gross domestic product (GDP) increased 2.8% on an annual basis in the third quarter, according to a report by the Bureau of Economic Analysis of the Department of Commerce. Economists polled by Bloomberg projected that the GDP will grow 2% in the third quarter.
The agency said the increase of the real GDP was driven by the expansion of private inventory investment, exports, residential fixed investment, state and local government spending, and personal consumption expenditures (PCE).
Commenting on the GDP data, Quincy Krosby, market strategist at Prudential Financial Inc said, “This will certainly fuel expectations that the underlying economy is stronger than the mixed data have suggested. The question is whether or not the markets can accept good news as good news or whether we’re still on the trajectory where good news is bad news. We’re going to reach an inflection point in the market where good news is in fact good news.”
On the other hand, Ernie Cecilia, chief investment officer of Bryn Mawr Trust Co. said, “The market will be volatile. You had some good economic news today and we’ll see what the payrolls numbers are tomorrow. The fear is that with better-than-expected economic numbers, tapering will commence sooner rather than later.”
A separate report from the Department of Labor showed that jobless claims were 336,000 for the week ending November 2; the figure declined by 9,000 from 345,000 in the previous week. The agency will release the unemployment data tomorrow. Economists are expecting that employers added fewer jobs in October.
- Dow Jones Industrial Average (DJIA)- 15, 593.88 (-0.97%)
- S&P 500- 1,747.16 (-1.32%)
- NASDAQ- 3,857.33 (-1.90%)
- Russell 2000- 1,079.48 (-1.74%)
- EURO STOXX 50 Price EUR- 3,042.98 (-0.44%)
- FTSE 100 Index- 6,697.22 (-0.66%)
- Deutsche Borse AG German Stock Index DAX- 9,081.03 (+0.44%)
Asia Pacific Markets
- Nikkei 225- 14, 228.44 (-0.76%)
- Hong Kong Hang Seng Index- 22,881.03 (-0.68%)
- Shanghai Shenzhen CSI 300 Index- 2, 342.55 (-0.55%)
Stocks in Focus
The stock price of Twitter Inc (NYSE:TWTR) surged more than 83% to $47.68 per share from its offering price of $26 per share during its initial public (IPO) offering today. The stock opened at $45.10 and traded smoothly at the New York Stock Exchange. The micro blogging company raised more than $2 billion from the public offering.
Tesla Motors Inc (NASDAQ:TSLA) declined more than 7% to $139.87 per share after reports that a third Model S vehicle caught on fire in Tennessee yesterday. The electric car manufacturer confirmed the incident and sent a team to investigate. According to the company, the driver of the Model S was not injured.
J.C. Penney Company, Inc. (NYSE:JCP) reported a 0.9% increase in same-store sales in October, which drove the stock higher by almost 6% to $8.13 per share. J.C. Penney CEO Mike Ullman said the result is encouraging given the fact that the company is dealing with a tough consumer environment and a government shutdown last month.
Meanwhile, the stock value of Whole Foods Market, Inc. (NASDAQ:WFM) dropped more than 11% to $57.26 per share after the company lowered its guidance for fiscal 2014. The company expects to deliver earnings in the range of $1.65 to $1.69 per share compared with its previous estimate of $1.69 to $1.72 per share. Whole Foods also projected that its sales growth will be around 11% to 13% compared with its previous expectation of 12% to 14%.