Dow closes nearly 200 points higher on better-than-expected GDP report, Nasdaq tumbles as Meta shares plummet

The Dow Jones Industrial Average closed higher Thursday after new data showed third-quarter GDP grew faster than expected and hinted at waning inflation, encouraging investors to buy stocks linked to the health of the economy.

The Dow climbed 194.17 points, or 0.6%, to end at 32,033.28 for its fifth day of wins. Shares of Caterpillar, McDonald’s and Honeywell led the 30-stock index higher after the companies reported better-than-expected earnings. The Dow traded up as much as 549 points during the day.

The S&P 500 closed down 0.6%, ending the session at 3,807.30. The Nasdaq Composite lost 1.6%, closing at 10,792.68, as a rout in Meta and other tech stocks weighed on the index.

The U.S. economy grew at a 2.6% annualized pace for the period, against the Dow Jones estimate for 2.3% growth, the Bureau of Economic Analysis report showed. The chain-weighted price index, a cost-of-living measure that is adjusted to reflect changing consumer behavior, rose 4.1% for the quarter, well below the 5.3% estimate. Headline inflation rose 4.2%, down sharply from 7.3%, according to a gauge the Federal Reserve uses.

That offered hope for market observers looking for data indicating inflation was coming down, which could lead the Federal Reserve to ease rate hikes after the November meeting, said Cliff Hodge, chief investment officer at Cornerstone Wealth. Bond yields also pulled back following the release of the data.

“The GDP release this morning was a goldilocks number for risk assets,” said Hodge, who specifically noted the price index data. “This is another sign pointing to the likelihood that the worst of inflation may be behind us.”

Still the technology sector continued its recent woes, holding the broader stock market back. Meta shares plummeted 24.6% on a weak fourth-quarter forecast and disappointing third-quarter earnings Wednesday. The company also said it would lose even more money next year building out the metaverse. The report led to several analysts downgrading the stock.

Lea la cobertura del mercado de hoy en español aquí.

Correction: The Dow was up as much as 549 points. A previous version misstated the number.