US close: Stocks lower following preliminary GDP reading

Wall Street stocks were in the red at the close of trading on Wednesday as market participants digested Q3 earnings and a preliminary Q3 GDP reading.

At the close, the Dow Jones Industrial Average was down 0.22% at 42,141.54, while the S&P 500 lost 0.33% to 5,813.67 and the Nasdaq Composite saw out the session 0.56% weaker at 18,607.93.

The Dow closed 91.51 points lower on Wednesday, extending losses recorded in the previous session.

Wednesday's primary focus was Q3 earnings from Meta Platforms, which fell short of user growth expectations and warned of a jump in AI spending in FY25, and Microsoft, which told investors that a boom in AI had fuelled double-digit growth in its cloud business.

Elsewhere, Eli Lilly shares headed south after sales of its obesity drug fell well and truly short of expectations, and trade bellwether Caterpillar was in the red after posting weaker-than-expected earnings.

Wednesday's other key headline was news that America's economy expanded at a steady clip during the third quarter on the back of robust consumer outlays. According to preliminary figures from the Department of Commerce, in seasonally adjusted terms the country's gross domestic product grew at an annual rate of 2.8%. That was only a tad less than the 3.0% clip observed over the three months ending in June and economists' forecasts calling for growth of 2.9%. Household consumption increased by 3.7%, led by a 6% jump in spending on goods, investment in non-residential equipment, meanwhile, jumped by 11.1% and government spending rose by 5% on the back of a 14.9% surge in defence outlays.

Elsewhere on the macro front, private sector hiring picked up in October notwithstanding hurricane recovery efforts, according to consultancy ADP, which reported a 233,000 rise in private sector payrolls, following a print of 159,000 for the month before and beating economists' forecasts for a reading of 233,000.

In other data news, US mortgage applications eased by 0.1% week-on-week in the seven days ended 25 October, according to the Mortgage Bankers Association, the lowest reading since July. Applications to refinance a mortgage fell by 6%, offsetting a 5% increase in applications to purchase a home.

Finally, pending home sales increased by 2.6% year-on-year in September, according to the National Association of Realtors, the first increase since March and the fastest since May 2021.

Reporting by Iain Gilbert at Sharecast.com