Stock Market Surge Amid Economic Data Boosts Hopes for Santa Claus Rally

U.S. stocks rose, setting the S&P 500 on track for a record close, following robust economic data that lifted bond yields. The GDP grew at a 4.3% annualized rate, surpassing estimates. The news lowered expectations of a Federal Reserve rate cut, despite mixed economic indicators.

U.S. stocks surged on Tuesday as the S&P 500 edged towards a record close, buoyed by promising economic data that elevated bond yields and revved up growth sectors. The latest figures from the Commerce Department revealed a GDP increase at an unexpected 4.3% annualized rate in the third quarter.

This brisk growth, the fastest since the same period in 2023, was driven largely by strong consumer spending and starkly exceeded the 3.3% predictions. Despite earlier concerns that a government shutdown might stifle progress, investors now see a reduced likelihood of a January rate cut by the Federal Reserve.

The stock market showed resilience with the Dow Jones, S&P 500, and Nasdaq all marking gains. Notably, AI stocks rebounded following last week's selloff. Stock market enthusiasts are eyeing the upcoming potential 'Santa Claus rally' as trading volumes are expected to diminish with the holidays approaching.

(With inputs from agencies.)