4:10pm: Stocks retreat
US stocks finished lower as investor optimism waned ahead of a key inflation report due Thursday which will guide the path forward for interest rates.
The Nasdaq led the losses, shedding 0.6% at 15,947 points while the S&P 500 was down 0.2% at 5,069 points and the Dow Jones slipped by 0.1% to 38,949 points.
After surpassing the $60,000 mark for the first time since November 2021, Bitcoin finished the day at about $60,100. It retreated from highs of about $63,000 after crypto trading platform Coinbase Global Inc (NASDAQ:COIN) users reported outages.
12.32pm: Stocks remain under pressure into afternoon
Come Wednesday afternoon, the Dow Jones, Nasdaq and S&P 500 all remained in the red as markets grappled with robust fourth-quarter gross domestic product (GDP) growth.
Figures released earlier in the day had revealed that the US economy grew by 3.2% in the fourth quarter of 2023, following a 4.9% rise in the third quarter.
This was below expectations for a 3.3% uptick, but commentators noted the figures proved the US’ resilience against high base rates and inflation compared to peers overseas.
The downside, though, is the all-but-certain prospect that cuts to such high-interest rates will now take place later than originally expected.
“Based on this data, the US consumer looks strong, and inflation is hovering around the Federal Reserve’s target rate,” XTB’s Kathleen Brooks commented.
“But, far from make life easy for the Fed, it actually makes it harder, as this data doesn’t give a clear signal about when the Fed should cut rates.
“If the US economy is growing at a 3.2% rate, this is fast, and is unlikely to be compatible with Fed rate cuts in the first half of the year.”
By midday Wednesday, the Dow Jones Industrial Average had clawed back some of its initial losses to sit 64 points lower at 38,907.
The S&P 500 sat 7 points off its opening value at 5,070 meanwhile, with the Nasdaq Composite having dropped 59 points at 15,975.
ebay Inc was among the day’s big risers, gaining over 8% after posting an earnings beat on sales of US$2.56 billion for the fourth quarter.
Google owner Alphabet Inc (NASDAQ:GOOG) was down over 2% as news broke of a hefty antitrust lawsuit from a coalition of European firms and chief executive Sundar Pichai was forced to issue an apology over pictures generated by its artificial intelligence chatbot Gemini.
Bitcoin held firm over the US$61,000 mark all the while, having gained over 8% throughout the day.
10.18am: Dow Jones leads markets lower, Bitcoin soars again
The Dow Jones led losses as the markets opened lower on Wednesday morning following the release of slightly worse-than-expected gross domestic product (GDP) data.
A 187-point drop at the open saw the Dow Jones Industrial Average down at 38,784.
The Nasdaq Composite lost 102 points to stoop to 15,933 in the meantime, as the S&P 500 shed 15 points, taking it to 5,062.
Losses came as GDP figures revealed the US economy grew by 3.2% in the fourth quarter of 2023, following a 4.9% rise in the third quarter.
Though this was slightly below forecasts of a 3.3% jump, analysts noted the figures proved the US economy was resilient after the effects of high base rates on the back of stubborn inflation has hampered others.
“GDP growth in the US is still running stronger than many other major economies,” Validus Risk Management’s Ryan Brandham commented.
“This provides the US with the opportunity to take time and assess the appropriate timing for potential rate cuts and fully understand the inflation situation without rushing to action.”
Such cuts do appear to have been ruled out anytime soon on the back of the GDP figures however, with attention now said to be firmly on Thursday’s personal consumption expenditures inflation, as per Titan Asset Management analyst Alex Livingstone.
“The resilient US growth reiterated the market's view of a March hike being off the table as the US consumer remains robust,” Livingstone said.
“We expect the inflation data to continue to decline but to a lesser extent as monetary policy grapples with sticky inflation.”
Elsewhere, Bitcoin continued an impressive rise into Wednesday, topping US$60,000 and leaving bulls eyeing up the all-time high of $69,000.
8.08am: Stocks called lower at the open
US stocks are projected to head lower on Wednesday's opening bell, following a mixed session yesterday.
The S&P 500 is trading 0.38% lower on futures markets ahead of the open, while Nasdaq 100 is down 0.49% and the Dow Jones facing a 0.32% decline.
This would extend losses for the Dow after a 0.25% slip the day before, while the S&P 500 last closed up 0.17% and the Nasdaq 0.37% higher.
Today is seeing a pullback, particularly in tech and smaller stocks, said market analyst David Morrison at Trade Nation.
Dating app owner Bumble Inc (NASDAQ:BMBL) is one such faller, down 11% in pre-market trading as it announced job cuts to deal with an expected slowdown in user spending.
Beyond Meat Inc (NASDAQ:BYND) shares, meanwhile, jumped more than 60% after the plant-based food brand said margins would grow massively this year.
Apple Inc (NASDAQ:AAPL, ETR:APC) shares are only down slightly in pre-market trading after last night it abandoned its decade-long electric vehicle project, while recent tech powerhouse NVIDIA Inc is trading 1.3% lower.
It has now lost about 3% from its record close last Thursday but "there still hasn’t been any hint of a significant pullback in the current rally since it began at the end of October," said Morrison.
"Looking at the S&P 500, the longest run of consecutive losing sessions is four, which took place between the end of December going into the New Year. That run resulted in a loss of less than 2%.
"Yet that remains the largest pullback in percentage terms as well as duration. This has proved very dispiriting for would-be bulls who failed to go long early on in the rally."
Another faller is Urban Outfitters which shed over 10% as the clothing retailer announced a strategic review after another quarter of dwindling sales.