S&P 500 Hits Record Close as Robust US Growth Boosts Tech Stocks

US equities surged on Tuesday, with the S&P 500 closing at an all-time high as fresh data revealed the US economy is expanding faster than anticipated. Strong economic readings fueled investor optimism, lifted bond yields, and propelled technology shares, which led the market rally.

The US Commerce Department reported that GDP grew at an annualized rate of 4.3% in the third quarter, surpassing the 3.3% forecast from economists. This marks the fastest growth pace since Q3 2023, driven primarily by resilient consumer spending. Delays caused by the 43-day US government shutdown had kept investors waiting for these numbers, and the stronger-than-expected report shifted market expectations for future interest rate policy.

 

Rising Yields and Changing Rate Expectations

The unexpected GDP strength prompted a rise in short-term Treasury yields, reflecting reduced odds of a Federal Reserve rate cut in the near term. The CME FedWatch Tool indicates that markets are recalibrating their outlook for monetary policy, factoring in that higher growth could delay or limit interest rate reductions. Analysts note that while this scenario benefits growth-focused sectors, it poses challenges for interest-sensitive industries such as energy, consumer staples, and private credit.

Technology Drives Market Momentum

Technology shares outperformed as growth stocks led the S&P 500 higher. The Dow Jones Industrial Average rose 79.73 points, or 0.16%, to 48,442.41, while the S&P 500 added 0.46% to 6,909.79. The Nasdaq Composite climbed 0.57% to 23,561.84. AI-related stocks recovered after last week’s pullback over valuation concerns. Nvidia jumped 3%, contributing most to the S&P 500 gains, with Amazon, Alphabet, and Broadcom each rising more than 1%.

Mixed Economic Signals and Seasonal Trading

Other indicators painted a more nuanced picture. US consumer confidence dipped in December, reflecting worries over jobs and income, while factory output remained flat in November. Despite these mixed signals, market momentum remains strong, with major indexes poised for a third consecutive annual gain. The S&P 500 and Dow are also on track for their eighth straight monthly rise, fueling hopes of a potential “Santa Claus rally” in the final days of 2025 and early January.

Trading volumes were lighter than average as the holiday season approaches. The US market will close early on Wednesday and remain shut for Christmas, with investors closely watching earnings and economic updates amid the seasonal slowdown.

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