US open: Stocks waver as GDP grows more than expected

US stocks wavered on Friday as data revealed that gross domestic product rose at the fastest pace in two years, raising expectations the Federal Reserve will hike interest rates in December.

At 1502 BST, the Dow Jones Industrial Average rose 0.11% to 18,190.26 points, but the S&P 500 fell 0.02% to 2,132.54 points and the Nasdaq declined 0.08% to 5,211.63 points.

Oil prices retreated ahead of a weekend meeting of OPEC producers in Vienna, amid doubts that the cartel will agree to cut supply to ease the glut.

Brent crude was down 0.839% to $50.05 a barrel and West Texas Intermediate was decreased by 1.016% to $49.22 at 1506 BST.

The Commerce Department said US GDP rose 2.9% in the third quarter, after rising 1.4% in the second.

It was the strongest rise since the third quarter of 2014 and beat expectations of 2.5%.

Paul Sirani, chief market analyst at Xtrade, said the last time GDP growth surged past 2% the Federal Reserve raised interest rates and with Friday’s numbers flying above that watermark, history may be about to repeat itself.

“The world’s largest economy is being fuelled by a buoyant jobs market, strong levels of consumer spending and healthy trade. If the indicators continue to point upwards for the US then Fed Chair Janet Yellen will look to stop things boiling over.

“Many believe that today’s big bump in growth will assure a December rate rise, but with a US election just weeks away, nothing is certain.”

This was echoed by analysts at Capital Economics, who said: “The bigger than expected 2.9% annualised gain in third-quarter GDP confirms that the economic recovery has regained some of the momentum lost within the last year.

“As such, this leaves the Fed firmly on track to raise interest rates in December and a hike at next week’s Federal Open Market Committee meeting isn’t entirely out of the question.”

Meanwhile, the market had the opportunity to react to results from technology giants Alphabet and Amazon, who posted their quarterly results after close on Thursday.

Shares in Alphabet, the parent company of Google, climbed 2.22% as it reported better than expected third quarter earnings as revenue was up 20% to $22.45bn. Analyst had expected the company’s advertising business to decline after a strong second quarter.

Whereas shares in Amazon tumbled 4.81% as the online retailer missed estimates while expenses surged.

Revenue increased by 29%, in line with expectations, while net income rose to $252m, or 52 cents per share, from $79m last year, below the expected 78 cents.

Shares were down 1.33% in oil company ExxonMobil, which reported a 38% drop in third quarter profit to $2.7bn before the opening bell, while Chevron also reported a decline in earnings due to weak oil prices.