Investing.com– U.S. stocks experienced a slight decline on Wednesday, largely due to a disappointing growth update. However, the losses were mitigated by a surge in Alphabet, the parent company of Google, following strong quarterly earnings.
At 09:35 ET (13:35 GMT), the Dow Jones Industrial Average fell 32 points, or 0.1%, the S&P 500 index dropped 6 points, or 0.1%, and the Nasdaq slipped 5 points, or 0.1%.
US Q3 GDP disappoints
Data released earlier on Wednesday revealed that the US economy grew at a slower rate than expected in the third quarter, with GDP rising by 2.8% in the July-September period. Economists had predicted a figure matching the second quarter’s pace of 3.0%.
On the other hand, the equivalent data from the Eurozone surprised to the upside, with growth coming in at 0.4% on the quarter, above the 0.2% growth forecast. Additionally, US ADP employment grew by 233,000, an increase from the revised 159,000 last month, hinting at positive trends ahead of Friday’s nonfarm payrolls data release.
These economic readings are likely to influence the outlook for interest rates, particularly as the Federal Reserve’s meeting next week approaches, where a rate cut of 25 basis points is widely expected. Volatility in stock markets is also expected to increase in anticipation of the 2024 presidential election, with voting scheduled for November 5. Donald Trump and Kamala Harris are expected to engage in a tight race, although recent polls and prediction markets indicate Trump gaining some ground.
Alphabet rises on strong earnings
In the corporate sector, Alphabet stock surged 7% after the company reported stronger-than-expected earnings for the September quarter. The tech giant also highlighted the success of its artificial intelligence investments. Its cloud business, which is closely connected to AI, experienced its fastest growth in eight quarters, while election-related spending boosted advertisement sales, particularly on YouTube. This positive performance from Alphabet set a favorable tone for upcoming earnings reports from other tech companies, including Meta Platforms and Microsoft reporting after the close on Wednesday, followed by Amazon and Apple on Thursday.
Elsewhere, Humana stock rose over 3% after the health insurer surpassed estimates for third-quarter profit, driven by strong performance in its government-backed Medicare Advantage insurance business for older adults. On the other hand, chipmaker AMD slid nearly 10% after its guidance for the current quarter fell short of expectations. Kraft Heinz stock also dropped over 4% after the consumer goods company reported a steeper-than-expected decline in quarterly revenue due to weak demand for its branded meal kits and snacks. Additionally, Eli Lilly stock slumped over 12% after the drugmaker missed estimates for third-quarter profit, despite increased demand for its weight-loss drug, impacted by higher manufacturing and acquisition-related costs.
Crude aided by API inventories
Oil prices saw an increase on Wednesday, recovering some recent losses as industry data indicated an unexpected draw in U.S. inventories. By 09:35 ET, the Brent contract rose 1.6% to $71.86 per barrel, while U.S. crude futures (WTI) traded 1.6% higher at $68.28 a barrel. Data from the American Petroleum Institute showed U.S. oil inventories fell by 0.57 million barrels in the past week, contrary to expectations for a build of 2.3 million barrels. The official Energy Information Administration data is set to be released later on Wednesday, and if it aligns with the API numbers, it could suggest that supplies in the largest fuel consumer in the world were somewhat constrained.