Dow Rallies by 1% on Weak GDP Report, Gold Plunges

The Dow Jones Industrial Average witnessed a massive rally during the trading session building on its gains from the overnight session and is being seen as a huge positive. It is important to point towards the fact though, the volumes were relatively lower during the trading session as most traders and institutional desks seems to be away for the holidays. The volatility index, which is used to gauge the fear in the market crashed by close to 10 percent and is indicative of the overall buying interest. The rally in crude prices led to a bounce back in energy stocks which was seen as a huge positive.

In some negative news for the US economy, it was reported today that the US economy grew at a slightly slower pace over the summer as compared to what the government had estimated earlier. According to a report released by the US Commerce Department, it was reported that the economy as measured in terms of GDP expanded at an annual rate of 2 percent during the July-September quarter. The reading was a bit lower than its previous estimate of 2.1 percent. It is important to state that most economists on the street expect a slight acceleration in the current quarter and stronger growth in the first half of 2016. Many analysts on the street believe that the weak GDP report means that the Federal Reserve might not hike interest rates any time soon which is seen as a huge positive for the equity markets.

Gold prices were lower during the trading session on the back of the rally seen in stock markets a clear indication that investors were moving away from safe haven asset classes towards riskier asset classes like equity. The Federal Reserve rate hike last week is being seen as a huge negative for gold prices going forward.

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