STOCKS RALLY, GOLD TUMBLES: Here’s What You Need To Know

SAM RO

 OCT. 31, 2014

REUTERS/U.S. Geological Survey

A slow-moving lava flow from the Kilauea Volcano burns vegetation as it approaches a property boundary in a U.S. Geological Survey (USGS) image taken near the village of Pahoa, Hawaii, October 28, 2014.

The stock market extended its rebound back toward all-time highs.

First, the scoreboard:

• Dow: 17,196.4, +222.1, (+1.3%)
• S&P 500: 1,994.6, +12.3, (+0.6%)
• Nasdaq: 4,554, +5.0, (+0.1%)

And now, the top stories on Wednesday:

1. The Dow far outpaced the rest of the market because of Visa, which surged 10% after its better-than-expected earnings announcement. Because it’s a price-weighted index, the 21-point rally in the Visa is adding a full 134 points to the Dow. (Currently, a 1-point move in the Dow translates to a 6.42195-point move in the Dow.)

2. US GDP grew at a 3.5% pace in Q3, beating expectations for 3.0% growth. Personal consumption climbed 1.8%, which was a bit lighter than the 1.9% expected. Real final sales (GDP less the change in private inventories) jumped 4.2%, up from 3.2% in Q2.

3. Notably, government spending jumped 4.6%, adding 0.83 percentage points to the GDP growth rate. “After being such a massive drag on the economy in recent years, the public sector is now a big positive,” Capital Economics’ Paul Ashworth said.

4. Different economists were surprised by different components of the GDP report. “The big upside surprise in the data is the residential investment component, where the 1.8% increase is impossible to square with the monthly construction data — we expected a 10% drop — and a downward revision in due course is a decent bet,” Pantheon Macroeconomics’ Ian Shepherdson noted.

5. Initial jobless claims climbed to 287,000 from 284,000 a week ago. This was a bit higher than the 285,000 expected. The four-week moving average sat at 281,000, the lowest level since 2000. “Looking past weekly volatility, trend initial jobless claims remain at extremely low levels and are consistent with our outlook for further improvement in labor markets,” Barclays’ Jesse Hurwitz said.

6. Gold fell below $1,200 again for the first time in a month. The yellow metal fell from around $1,215 to as low as $1,196.