U.S. stocks get a boost from tech after better than expected GDP report

By Liz Moyer

Investing.com -- U.S. stocks were rising, led by tech stocks, on a better than expected reading of fourth-quarter economic output.

At 10:34 ET (15:34 GMT), the Dow Jones Industrial Average was up 88 points or 0.3%, while the S&P 500 was up 0.6%, and the NASDAQ Composite was up 1.2%.

Economic growth slowed in the fourth quarter compared with the third, a sign the Federal Reserve’s aggressive interest rate increases last year are kicking in. Gross domestic product rose 2.9% in the last three months of the year, beating expectations but slower than the 3.2% reported for the third quarter.

But the labor market remains robust, despite several large technology giants cutting jobs in recent days. Initial jobless claims of 186,000 came in lower than the 205,000 expected for last week and also below the week before that.

The Fed will meet next week to decide on the next step for interest rates, and most expect it will raise by another quarter of a percentage point, which is a smaller increment than at its previous meetings.

Investors have been awaiting the time when the Fed’s interest rate moves will pause or perhaps pivot, though Fed officials have emphasized they want to see the terminal rate above 5% in order to tame inflation. That implies another rate hike or two after next week’s meeting if the Fed meets expectations.

Stocks were getting a lift from Tesla's (NASDAQ:TSLA) better-than-expected results. The electric car maker said recent price cuts have fueled demand for the product, though it also acknowledged challenging economic conditions ahead. Shares of Tesla were up 9.4%

American Airlines Group (NASDAQ:AAL) shares rose 0.5% after it forecast 2023 earnings per share in a range around $3, well above the $1.89 market consensus. Shares of Dow Inc (NYSE:DOW) fell 1.5% after its fourth-quarter earnings missed expectations because of higher costs and a slowdown in demand.

Chevron Corp (NYSE:CVX) stock rose 3.9% after the oil major announced a plan to buy back $75 billion of its stock. Chevron reported record profit in recent quarters.

Oil was higher. Crude Oil WTI Futures was up 1.5% to $81.41 a barrel, while Brent crude was up 1.6% to $87.47 a barrel. Gold was down 0.8% to $1926.