WASHINGTON (dpa-AFX) - After showing a lack of direction early in the session, stocks moved mostly higher over the course of the trading day on Tuesday. The major averages added to the gains posted over the past few sessions, with the S&P 500 reaching a new record closing high.
The S&P 500 and the Nasdaq ended the day just off their highs of the session. The S&P 500 climbed 31.30 points or 0.5 percent to 6,909.79 and the Nasdaq advanced 133.02 points or 0.6 percent to 23,561.84, while the Dow rose 79.73 points or 0.2 percent to 48,442.41.
The choppy trading seen early in the day after the Commerce Department released a report showing the U.S. economy grew by much more than expected in the third quarter of 2025.
The Commerce Department said real gross domestic product spiked by 4.3 percent in the third quarter after surging by 3.8 percent in the second quarter. Economists had expected GDP to jump by 3.3 percent.
At the same, the report also showed the pace of consumer price growth accelerated in the third quarter compared to the second quarter.
The data led to renewed uncertainty about the outlook for interest rates heading into the new year, with the Federal Reserve scheduled to hold its first meeting of 2026 in late January.
CME Group's FedWatch Tool is currently indicating an 86.7 percent chance the Fed will leave interest rates unchanged, up from 58.0 percent a month ago.
'These data, along with the recently released employment and CPI metrics, show an economy that is growing, but unevenly, and one where inflation is still running well above the FOMC's target,' said Mortgage Bankers Association SVP and Chief Economist Mike Fratanton.
He added, 'We forecast that the FOMC will be on hold at its January meeting, and will likely cut rates just once more next year.'
The strength that emerged as the day progressed may have reflected recent upward momentum, with Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management, noting the 'path of least resistance is higher until the end of the year.'
Buying interest may also have been generated in reaction to comments by National Economic Council Director Kevin Hassett.
Hassett, a leading contender to succeed Federal Reserve Chair Jerome Powell, told CNBC the U.S. is 'way behind the curve in terms of lowering rates.'
Sector News
Despite the advance by the broader markets, most of the major sectors ended the day showing only modest moves.
Notable strength was visible among natural gas stocks, however, with the NYSE Arca Natural Gas Index climbing by 1.0 percent.
On the other hand, airline stocks showed a significant move to the downside, dragging the NYSE Arca Airline Index down by 2.5 percent.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Tuesday. Japan's Nikkei 225 Index closed just above the unchanged line and China's Shanghai Composite Index inched up by 0.1 percent, while Australia's S&P/ASX 200 Index jumped by 1.1 percent.
Meanwhile, the major European markets turned in a mixed performance on the day. While the French CAC 40 Index dipped by 0.2 percent, the German DAX Index and the U.K.'s FTSE 100 Index both rose by 0.2 percent.
In the bond market, treasuries recovered from early weakness to finish the session roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, closed unchanged at 4.169 percent after reaching a high of 4.202 percent.
Looking Ahead
Trading on Wednesday may be impacted by reaction to a report on weekly jobless claims, although activity is likely to be subdued ahead of the Christmas Day holiday on Thursday.
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