U.S. stock indexes bolted higher at the open Friday and gripped good gains in midday action. The first take on Q2 GDP was pegged at 3%, above the strongest estimate in the range.
XAutoplay: On | OffThe Nasdaq retook the leadership role, up 1.9%. The S&P 500 advanced 0.7%, and the Dow Jones industrial average inched up 0.1%. The small-cap Russell 2000 added 0.4%.
Volume in the stock market today was higher vs. the same time Thursday.
Nasdaq 100 components having an exceptionally good day included Amazon.com (AMZN), up 11%; Microsoft (MSFT), up 7%; Alphabet (GOOGL), up 6%; and Facebook (FB), up 3.5%.
Alphabet’s move involved a breakout. The stock cleared a consolidation that dates to June. Volume was huge. Facebook climbed back above its 175.59 buy point, but it was barely above a consolidation going back to late July. Amazon also scored a breakout but it was barely above the consolidation.
Microsoft hit a 52-week high after topping the Street’s quarterly earnings estimates by almost 17%. The stock is too far above a valid buy point to be bought.
The GDP number caught the market off guard. Growth came in at 3%, easily topping the Street’s consensus estimate of 2.5% and edging above 2.9%, the highest estimate in the range. The strong data solidified expectations for a December rate hike from the Federal Reserve. The growth surprised some analysts who had been expecting a drag from hurricane damage.
The Fed also appeared to expect more of a slowdown. In September, Fed head Janet Yellen said Q3 economic growth “will be held down” by the hurricanes. But the 3% growth was only a tick below the 3.1% growth in the second quarter.
CME Group’s FedWatch Tool now puts the probability of a rate hike in December at 99.9%. The chance for a quarter-point hike to 1.25% to 1.50% is pegged at 95.2%. The chance for a half-point increase is put at 4.7%. The current rate is 1% to 1.25%.
More news on the Fed is expected before President Trump leaves for a 12-day trip in Asia. Trump is expected to name his candidate for the Federal Reserve. He has not ruled out reappointing Yellen, but that is not considered likely.
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Originally posted 2017-10-27 17:30:21.
