4:10pm: US stocks down for third straight day
Major US stock indices finished the day lower as better than expected GDP data and jobless claims had traders questioning the timing of future interest rate reductions.
The Nasdaq and the S&P 500 both fell 0.5%, while Dow was down 0.4%.
Oracle shares slipped nearly 6%, down for the third straight day, as questions linger about the strength of the artificial intelligence (AI) trade.
Shares of Tesla also gave back more than 4%, partly driven by a sell rating issued by Rothschild & Co Redburn
3:10pm: Proactive news headlines
- Gunnison Copper Corp (TSX:GCU, OTCQB:GCUMF) reported its first copper cathode sales from the fully operational Johnson Camp Mine in southeast Arizona.
- T Stamp Inc, doing business as Trust Stamp Inc (NASDAQ:IDAI, EURONEXT:AIID), announced that it has reached 100 financial institutions on its low-code Orchestration Layer.
- Algernon Health (CSE:AGN, OTCQB:AGNPF) told investors it has signed a C$4 million equipment order and financing agreement to acquire brain scanning systems that will be used in Algernon’s planned neuroimaging centres, which will be focused on early-stage Alzheimer’s detection.
1:10pm: US stocks lower on stronger economic growth, AI stock selling
Major US stock indices were all down midday as better than expected GDP data and jobless claims had traders questioning the timing of future interest rate reductions.
The Nasdaq fell 0.5%, Dow edged 0.3% lower, and the S&P 500 gave back 0.4%.
Oracle shares fell 5%, down for the third straight day, as questions linger about the strength of the artificial intelligence (AI) trade.
10.30am:
The selling on Wall Street has abated slightly, with the S&P down 0.4% now and the Nasdaq down around 0.5%, while the Russell 2000 is still down around 1%.
After the US GDP, trade and jobless data, Bill Adams, chief economist for Comerica Bank, says this latest data dump is "considerably more upbeat than the droopy August jobs report".
While inflation was revised up slightly, he says the latest estimates "still suggest most of the price effects from tariffs had yet to reach consumers in the second quarter".
And with the trade deficit shrinking sharply in August as tariff frontrunning stopped, Adams says this "is a tailwind to third quarter GDP, since it implies more U.S. spending went to domestically-produced goods and services rather than imports".
And jobless claims fell to the lowest since July, with continued claims the lowest since May.
"The latest GDP and jobless claims data should ease the bout of anxiety kicked off by the weak August jobs report and downward revisions to benchmark employment data published September 9," Adams says.
"Hiring is in low gear in 2025, but economic growth is resilient, and the job market does not appear to have weakened in September."
Last week, the Fed’s dot plot indicated that additional rate cuts are likely at their next two decisions in late October and December, "but the case for back-to-back cuts is no slam dunk", he adds.
"While hiring is weak in the U.S., the working-age population is not growing either. The latest estimates from the CBO show essentially zero growth of the age 20-64 population this year and next due to less immigration and an aging native-born population.
"While the Fed isn’t on autopilot, the odds favor additional monetary stimulus over the next 12 months at the same time that tax cuts and increased government spending will be juicing growth."
Oliver Allen at Pantheon Macroeconomics says the US economy’s momentum "looks relatively robust".
The jump in durable goods orders was partly due to a big gain in the volatile aircraft orders components, but underlying orders also held up well.
The fall in the goods trade deficit was mostly due to weaker imports, as July’s jump in industrial supplies imports entirely unwound, but this swing seems to be due to swings in volatile trade in gold, Allen says.
"Looking past trade in gold, the big picture is that the underlying goods trade deficit seems to have settled only a bit below its 2024 level, now that the big tariff stockpilling swings earlier this year have mostly worked their way through the numbers."
9.55am: Wall Street sell-off at the open
US stocks have plunged at the open, led by tech and small caps.
The tech-powered Nasdaq has dropped 1.2% and the more domestically focused small and mid-cap Russell 2000 is down 1.9% and the S&P 500 has dropped 0.9%.
It's a smaller fall for the Dow Jones, which is down 0.45%.
Nvidia, Alphabet, Meta, Broadcom are all down over 1%, while Tesla and Oracle are down more than 3%.
Top risers on the S&P were IBM and Intel Corp - a bit of a blast from the past.
US data dump:
A tumult of US economic data included the GDP report, which showed the US economy grew 3.8% last quarter.
This was driven by consumption, with the personal consumption index up 2.5%, beating estimates of a 1.7% reading.
There was also good news around inflation: the GDP price index was 2.1%, and the core PCE index was 2.6%, up a notch from the previous reading of 2.5%.
Elsewhere, the goods trade deficit fell to $85.5 billion in August from $102.8 billion, below the consensus forecast of $95.4 billion.
Wholesale inventories fell 0.2%, below the consensus forecast of 0.1%, while retail inventories were unchanged.
Durable goods orders rose 2.9%, above the consensus estimate which was for a 0.3% decline. Net revisions were +0.1%.
Orders ex-transportation increased 0.4%, which had been expected to remain flat. Nondefense capital goods orders excluding aircraft fell 0.3%, when the consensus was flat. Net revisions were -0.3%.
Initial jobless claims fell to 218K in the week ending September 20, from 232K the week before, below the average economists forecast of 233K.
Continuing claims dropped to 1,926K, from an upwardly-revised 1,928K, also below the consensus of 1,932K.