U.S. Stocks Rise as GDP Surges, Confidence Wanes/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. stocks moved higher Tuesday as Wall Street digested strong third-quarter GDP growth alongside persistent inflation and sinking consumer confidence. The S&P 500 approached its all-time high, led by big tech gains, even as economic uncertainty clouds the outlook. Investors remain focused on Fed policy as interest rate cuts remain undecided for 2026.
Quick Look: Market Snapshot
- S&P 500: +0.3%, nearing record high
- Dow Jones Industrial Average: +68 points (+0.1%)
- Nasdaq Composite: +0.4%, lifted by tech stocks
- Big Tech Leaders: Nvidia +2.5%, Alphabet (Google) +1.4%
- Novo Nordisk: +8% after pill version of Wegovy approved
U.S. Stocks Rise as GDP Surges, Confidence Wanes
Key Developments on Tuesday
1. Stocks Close in on Records Amid Mixed Economic Signals
Stocks across Wall Street inched closer to record levels Tuesday, fueled by big tech and a stronger-than-expected GDP report for Q3. However, continued inflation pressures and falling consumer sentiment tempered the optimism.
2. S&P 500, Nasdaq, and Dow All Gain
The S&P 500 rose by 0.3% mid-day, just shy of its all-time high set earlier in December. The Dow climbed by 68 points, or 0.1%, while the tech-heavy Nasdaq advanced 0.4%, continuing its year-end surge.
3. Novo Nordisk Surges on Drug Approval
Novo Nordisk shares jumped 8% after U.S. regulators approved a daily pill version of its popular weight-loss medication, Wegovy. It becomes the first oral obesity drug of its kind on the U.S. market.
4. Economic Growth Exceeds Expectations
New government data revealed that the U.S. economy expanded at a robust 4.3% annualized rate in the third quarter, building on 3.8% growth in Q2. The strong performance marks a sharp rebound from Q1, when the economy contracted for the first time in three years.
Fed’s Balancing Act: Growth vs. Inflation
Inflation Remains Elevated
Despite the impressive growth, inflation continues to challenge policymakers. The Federal Reserve’s preferred inflation measure, the personal consumption expenditures (PCE) index, rose to 2.8% in Q3 — up from 2.1% in Q2 and still well above the Fed’s 2% target.
Treasury Yields Rise
In response to the economic data, bond yields climbed.
- 10-year Treasury: Up to 4.18% from 4.15%
- 2-year Treasury: Up to 3.54% from 3.49%
These increases reflect shifting expectations on future Fed policy decisions.
Rate Cuts in 2026 Still Uncertain
The Fed has already enacted three interest rate cuts in 2025. However, its policy committee remains divided on whether additional cuts will be needed in 2026. Wall Street currently anticipates that the Fed will hold rates steady in its January meeting.
Analyst Take
Dominic Pappalardo, chief multi-asset strategist at Morningstar Wealth, commented that Tuesday’s data only “complicates the Fed’s dilemma,” as it attempts to weigh strong growth against cooling labor markets and persistent inflation.
Consumer Confidence Weakens Further
Consumer Sentiment at 2025 Lows
The Conference Board reported that consumer confidence fell in December to 89.1, its lowest reading since April — the same month President Donald Trump implemented widespread tariffs. Sentiment continues to suffer under the weight of high prices and economic uncertainty.
Job Market Jitters
Consumers also expressed more pessimism about the job market:
- 26.7% said jobs were “plentiful” (down from 28.2%)
- 20.8% said jobs were “hard to get” (up from 20.1%)
Visa Data Shows Weakening Holiday Sales
Consumer spending, while still rising, has cooled. Visa’s Consulting & Analytics group reported that sales from Nov. 1 through Dec. 22 rose by 4.2%, down from 4.8% during the same period last year. Shoppers are more selective, focusing on essentials rather than discretionary holiday splurges.
Market Overview: Holiday Week Trading
Quiet Holiday Schedule
Markets will close early Wednesday for Christmas Eve and remain closed Thursday for the Christmas holiday.
Gold Prices Climb
- Gold: +0.6% on the day
- Year-to-date: Up roughly 70%, as investors seek safe-haven assets
Oil Holds Steady
- U.S. benchmark crude: +0.2%
- Brent crude: +0.1%
Global Markets Mixed
Markets across Europe and Asia posted mixed results amid uncertainty about U.S. rate policy and global growth forecasts.
What’s Next
- Labor Market Report Wednesday
The U.S. Labor Department will release its weekly jobless claims report, a closely watched metric of unemployment and labor trends. - Fed Decision Looms in January
Investors are watching for signals from the Fed about interest rate direction heading into 2026. The key debate: whether inflation is receding fast enough to justify further easing — or whether solid growth means tighter policy may linger longer.
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