Stocks whipsawed in volatile trading Thursday as investors mulled over a better-than-expected fourth-quarter GDP report and an update from the Federal Reserve on its rate hike plan.
The Dow Jones Industrial Average shed about 120 points, or 0.4%, after being up more than 600 points at its highs. The S&P 500 ticked down 0.8% and the Nasdaq Composite traded down 1.3%, turning negative midday.
Fourth-quarter gross domestic product jumped 6.9% from the year prior, the Commerce Department reported Thursday. Economists surveyed by Dow Jones expected the economy grew at a 5.5% annualized pace in the final three months of 2021.
“The Q4 GDP report was a nice upside surprise in a string of recently underwhelming economic data points,” Mike Reynolds, vice president of investment strategy at Glenmede, said in a note.
Netflix jumped more than 7% on news that Pershing’s Bill Ackman bought 3.1 million shares. ServiceNow surged about 8% after better-than-expected quarterly results.
On the downside, Intel lost 7% and Tesla fell 8% despite a strong earnings report. Robinhood shed 7% ahead of reporting quarterly results after the closing bell.
Investors continued to digest the latest update on monetary policy as the Federal Open Market Committee strongly indicated the first interest rate hike since late 2018 could come as soon as March.
Fed Chairman Jerome Powell rattled markets Wednesday saying the central bank has “quite a bit of room” to raise rates before negatively impacting employment.
“Yesterday’s FOMC decision and Powell’s presser was both positive and negative for markets, but in the end, it mostly reinforced what we know: The Fed is serious about raising rates, that’s going to continue to … keep markets volatile,” Tom Essaye, founder of Sevens Report, said in a note.
Stocks are coming off three-straight roller-coaster sessions with indexes seeing big swings each day this week. The three major averages are solidly in negative territory this month, with the Nasdaq down more than 15% from its intraday high.
