Stocks rebound from big sell-off | Big Tech rallies ahead of earnings | Record GDP growth
EDITOR'S NOTE
Economists expected a massive rebound in economic growth for the third quarter and they got one.
The U.S. economy grew at an annualized rate of 33.1% in the quarter, topping a Dow Jones estimate of 32% and marking the fastest pace of economic expansion on record in the U.S. The strong growth was driven in part by increasing consumption and solid business and residential investments.
That strong GDP print came after the U.S. economy suffered its largest-ever contraction in the second quarter. However, the economy remains below its pre-pandemic levels even after the sharp third-quarter rebound. Some investors fear the economy could face a tougher road ahead as lawmakers have yet to approve new coronavirus fiscal stimulus. "GDP rebounded stronger than expected in the third quarter, but the big question on everyone's mind is whether the economy can remain on firm ground in the fourth quarter and into 2021," said Ryan Detrick, chief market strategist at LPL Financial, in a note. "Barring a new round of fiscal stimulus, it's likely that growth will taper off in the fourth quarter, but we still don't expect a double-dip recession."
Nevertheless, the stronger-than-forecast GDP data, coupled with improving unemployment numbers and sharp gains from stocks of major tech companies, helped Wall Street recapture some of its steep losses from the previous session.
The Dow Jones Industrial Average closed about 140 points higher. The S&P 500 and the Nasdaq Composite gained 1.2% and 1.6%, respectively.
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