US GDP Strong Growth and IT Sector Outperformance... New York Stock Market Sharp Rebound

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Baek Jong-min] The better-than-expected Q3 U.S. economic growth rate reversed the U.S. stock market's plunge from the previous day into a rise.

On the 29th (local time), the Dow Jones Industrial Average rose 139.16 points (0.52%) to close at 26,659.11, the S&P 500 index increased by 39.08 points (1.19%) to 3,310.11, and the Nasdaq index climbed 180.72 points (1.64%) to finish at 11,185.59.

The New York stock market had fallen the day before due to concerns over economic recovery worsening amid the resurgence of COVID-19, but the economic growth rate announcement changed the mood. The fear index, which had surged, also dropped by 6.68%.

The U.S. Department of Commerce announced that the Q3 U.S. economic growth rate was 33.1% on an annualized basis compared to the previous quarter. This is the highest growth rate ever, surpassing market expectations. The U.S. had experienced negative growth of -5% in Q1 and -31.4% in Q2 following the COVID-19 pandemic.

However, despite this growth, the size of the U.S. economy still fell short of the level at the end of last year. The quarterly growth rate converted to a single quarter was 7.4%, which is far from sufficient to recover the pre-COVID economic scale.

Last week, the number of unemployment insurance claims also decreased by 40,000 from the previous week to 751,000, marking the lowest level since March.

Apple, Amazon, Facebook, and Alphabet, which were set to announce earnings that day, all surged initially but showed mixed results after the announcements.

Amazon's stock rose 2.21%, Alphabet 3%, Facebook 4.9%, and Apple 3.7% compared to the previous day. In after-hours trading following earnings announcements, Facebook and Alphabet stocks showed strength, while Apple and Amazon stocks weakened.

Amazon, Google, and Facebook's earnings exceeded expectations, but Apple's earnings, although better than expected, remained at the forecasted level.

Amazon's Q3 earnings per share were $12.37, far exceeding the market forecast of $7.37. Revenue also greatly surpassed expectations at $96.1 billion compared to the forecast of $92.6 billion.

Google's parent company Alphabet reported earnings per share of $16.40, significantly above the expected $11.30. Revenue was $46.1 billion, well above the forecast of $42.7 billion.

Facebook's earnings per share were $2.71, beating the expected $1.89. Revenue was $21.4 billion, significantly exceeding the forecast of $19.7 billion.

Leading stock Apple’s results were similar to expectations. Apple's earnings per share were $0.73, slightly above the forecast of $0.71, and revenue was $64.7 billion, a bit higher than the expected $63.9 billion.

The sharp rise in U.S. GDP also boosted the value of the dollar. The dollar index, which shows the dollar's value against major currencies, rose 0.59% to 93.957. During the session, it even surpassed the 94 mark. The dollar index hitting 94 was the first time in about a month.

International oil prices fell sharply for two consecutive days due to concerns over the resurgence of COVID-19. December delivery West Texas Intermediate (WTI) crude oil closed down 3.3% ($1.22) at $36.17 per barrel, marking the lowest price since June 1.

International gold prices also declined due to the rising dollar value. December delivery gold closed down 0.6% ($11.20) at $1,868.00 per ounce.