US open: Stocks gains after GDP data, airlines jump

US stocks rose strongly on Thursday morning in New York, with the Dow and S&P 500 both at fresh record highs, after GDP data came in ahead of forecasts.

US GDP expanded more than anticipated in the last three months of 2023, complicating the picture for interest rates as the Federal Reserve has to contend with stronger-than-expected economic growth amid a potential loosening of monetary policy.

The economy grew at a year-on-year rate of 3.3% in the fourth quarter, according to preliminary estimates released by the Bureau of Economic Analysis on Thursday. This was a big slowdown from the significant 4.9% expansion registered in the third quarter, but will have come as a surprise to many economists who are broadly looking for growth of just 2.0%.

All three major Wall Street indices were up 0.6% early on, with the Dow setting a new peak at 38,015, the S&P 500 hitting 4,896, and the Nasdaq touching 15,575 – edging closer to the all-time closing high of 16,057 reached in November 2021.

In other news, initial weekly jobless claims totalled 214,000 in the week to 19 January, up 25,000 from a revised 189,000 the week before, which was upped by 2,000. The consensus estimate was 200,000. However, the four-week moving average declined 1,500 to 202,250 and economists believe the near-term trend remains positive.

US durable goods orders came in flat in December after 5.5% growth the previous month, well below the 1.1% increase expected.

Meanwhile over the Pond, the European Central Bank held interest rates steady at 4.5% and talked down the possibility of a Spring rate cut in the press conference that followed the decision.

Airlines take the stage

Shares in American Airlines jumped over 9% early on after the carrier smashed estimates with its fourth-quarter results and posted the lowest number of yearly flight cancellations in 10 years. Adjusted earnings per share came in at 29 cents, miles above consensus at 11 cents as profit margins fell less than anticipated, while revenues fell a less-than-expected 1% to $13.06bn.

The market also reacted favourably to Southwest's results, which beat forecasts and confirmed plans to remove Boeing's 737 MAX 7 model from its 2024 fleet. Alaska Air was also higher despite warning that it would take a $150m hit from the grounding Boeing aircraft following a mid-air incident earlier this month. Boeing shares were down over 5%.