4:10pm: Another record for the S&P 500
The S&P 500 has again set a new record closing price of 4,894.16 points, marking the fifth day in a row of new highs.
The Dow Jones added 0.6% at 38,049 points while the Nasdaq gained 0.2% at 15,510 points.
Tesla Inc (NASDAQ:TSLA) finished the day down 12.1% at $182.63 after the EV-maker warned of a production slowdown and posted a quarterly profit miss.
12:00pm: Rate cut back back on the agenda but will it be March or May?
Stocks continue to forge ahead after the upbeat economic data which puts an early interest rate cut back on the agenda.
At midday the Dow Jones Industrial Average was up 0.3% at 37,899.92, the S&P 500 was up 0.5% at 4,891.84 and the Nasdaq Composite was up 0.6% at 15,577.74.
James Knightley at ING Economics commented: "Fourth-quarter 2023 GDP growth beat all expectations thanks to strong consumer and government spending plus a positive contribution from net trade."
"First-quarter GDP growth is expected to be weaker based on business surveys, but the Fed is close to declaring victory on inflation with the second consecutive 2% quarterly core inflation reading."
Knightley explained that the Fed's favoured measure of inflation – the core personal consumer expenditure deflator – has come in at 2% annualised for the second quarter in a row.
He thinks tomorrow's monthly data will confirm that the month-on-month increase has come in below the key 0.17% threshold for the sixth month in seven – "that's the run rate we need to hit over 12 months to get us to 2% year-on-year."
"As such the Fed now has huge scope to cut rates. We just think the Fed will wait a little longer to make sure it is really, really confident it can afford to cut – we expect the first move in May with 150bp of cuts this year."
9:42am: Stocks climb on soft landing hopes after strong growth figures
Stocks in New York advanced after figures showed the US economy grew faster than expected in the quarter while inflationary pressures eased.
Shortly, after the opening bell, the Dow Jones Industrial Average was up 101.45 points, 0.3%, at 37,907.84, the S&P 500 was up 18.76 points, 0.4%, at 4,887.31 and the Nasdaq Composite was up 75.67 points, 0.5% at 15,557.59.
Figures from The Bureau of Economic Analysis showed the economy expanded by 3.3% annualised rate in the fourth quarter, ahead of market forecasts of 2.0% growth.
The BEA said: "The increase in real GDP reflected increases in consumer spending, exports, state and local government spending, non-residential fixed investment, federal government spending, private inventory investment, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased."
Though the economy grew at a faster pace than expected, inflationary pressures eased.
In the fourth-quarter, the personal consumption expenditures index rose 2.8% on-year, easing from a 3.1% rise in the third-quarter.
Monthly PCE data for December, including the Federal Reserve's preferred core measure, are released at 1330 GMT on Friday.
The next Fed decision is on Wednesday next week.
Eslewhere, weekly jobless claims rose more than predicted in the last week, while durable goods orders data was weaker-than-expected.
Ian Shepherdson at Pantheon Macroeconomics said: "The 1.99% increase in the core PCE deflator in Q4 follows a 2.04% rise in the third, so the Fed has now hit its target on this measure on a sequential basis for two straight quarters."
He thinks the Fed will have to ease unless they have very good reasons to think the economy is about to re-strengthen or inflation somehow will rebound.
"We doubt those arguments can be made with confidence, so we expect the first easing in March or May, leaning 60/40 in favor of the former."
7:00am: Stocks seen flat, Tesla slumps after "train wreck" conference call
Stocks are seen little changed in New York, despite a big fall in Tesla’s share price, as investors await economic growth figures.
In pre-market trading, futures for the Dow Jones Industrial Average were down 0.1%, while those for the S&P 500 were flat and contracts for the Nasdaq 100 futures rose 0.1%.
On Wednesday, the S&P hit a fresh intra-day high, while Microsoft, which reached a $3 trillion valuation for the first time, Facebook parent Meta and chipmaker Nvidia all hit record intra-day highs.
Economists expect the advance estimate for US fourth-quarter economic growth to come in at 2.3%, down from 3.3% growth in the third quarter.
Tesla dropped 7.8% in pre-market trading after disappointing results and warning of “notably lower” growth in 2024 than that achieved in 2023.
Elon Musk's electric vehicle maker said the company "is currently between two major growth waves."
Wedbush analyst Dan Ives said: “We were dead wrong expecting Musk and team to step up like adults in the room on the call and give a strategic and financial overview of the ongoing price cuts, margin structure, and flucuating demand....instead we got a high level Tesla long term view with another train wreck conference call.”
Elsewhere, the results keep rolling in with Intel and Visa reporting after the closing bell.
Air carriers Southwest Airlines (NYSE:LUV), American Airlines and Alaska Air Group (NYSE:ALK) report earnings before the bell as does Comcast, NextEra Energy (NYSE:NEE) and Northrop Grumman (NYSE:NOC).