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.
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 GDP rose at a 4.3 percent annual rate in the July-September quarter, which reinforced the economy’s ability to handle record energy prices following Hurricanes Katrina and Rita.
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 they reached 4½-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.”
The Dow Jones industrial average fell 82.29, or 0.76 percent, to 10,805.87.
Broader stock indicators were mixed. The Standard & Poor’s 500 index lost 8 points, or 0.64 percent, to 1,249.48, and the Nasdaq composite index rose 0.11 to 2,232.82. The Bloomberg Colorado Index, a price-weighted list of companies based in the state, rose 0.19 to 317.89.
Crude futures moved higher after dropping to five-month lows earlier in the session. A barrel of light crude settled at $57.32 on the New York Mercantile Exchange.
With crude-oil futures off their summer highs and economic data improving, Wall Street enjoyed gains in November: The Dow gained 3.5 percent, the S&P rose 3.52 percent, and the Nasdaq surged 5.31 percent.
