U.S. equity markets faced another day of declines on Thursday, marking the third consecutive session of losses for the major indexes. Despite a robust economic backdrop suggested by recent data indicating consumer and business resilience, the markets struggled to maintain upward momentum. The Bureau of Economic Analysis reported that the final estimate for second-quarter gross domestic product (GDP) reflected a 3.8% growth rate from April to June, surpassing the earlier estimate of 3.3%.
Northlight Asset Management Chief Investment Officer Chris Zaccarelli commented on the current market environment, describing it as the “most distrusted bull market of all time,” correlating with what he termed “the most distrusted economy of our lifetime.” He noted that while economic growth is significantly outpacing elevated inflation, there remains a disconnect between the stock market and the economy at large. Zaccarelli suggested that a stronger economy typically leads to improved corporate earnings, which would, in usual circumstances, result in higher stock prices.
This sentiment is further evidenced by a historic rally that has seen the S&P 500 exceed year-end analyst forecasts by over 2%. Analyst Alexandra Semenova pointed out that this discrepancy has rarely been observed so markedly since 1999 and 2024. Adding to the signs of ongoing economic activity, the Census Bureau reported a 2.9% increase in new orders for durable goods in August, following two months of declines.
However, the persistent strength of the economy poses challenges for the Federal Reserve in justifying future rate cuts. NYK Capital Management’s co-founder Daniel Altman attributed the economic stability in part to the settling of the current administration’s policies, which has reduced uncertainty in hiring and investment decisions. Nonetheless, he expressed caution regarding potential government shutdowns and their unpredictable impact on the economy.
Investors are now awaiting key economic indicators scheduled for release, including the Personal Consumption Expenditures Price Index (PCE) and September’s final University of Michigan Surveys of Consumers data. Additionally, the next jobs report is set to be published just before the market opens on October 3.
At Thursday’s closing bell, the Dow Jones Industrial Average fell 0.4% to 45,947, while the S&P 500 declined 0.5% to 6,604. The Nasdaq Composite also dropped 0.5% to close at 22,384.
In individual stock movements, International Business Machines (IBM) led the Dow with a notable gain of 5.2% after HSBC announced it utilized IBM’s quantum computers for enhanced predictions in the bond market, showing significant improvements over traditional methods. Meanwhile, Intel (INTC) surged by 8.9% following reports that it is in discussions with Apple for a potential equity investment. Intel has experienced a 69.5% increase this year and rebounded 92.4% from its April low, aided in part by federal investment.
Conversely, CarMax (KMX) faced substantial losses, plummeting 20.1% in the wake of disappointing quarterly earnings—reporting earnings of 64 cents per share, well below analysts’ expectations of $1.04. The company is now implementing measures to cut costs by at least $150 million over the next 18 months due to what CEO Bill Nash labeled a “challenging” quarter.
In the mining sector, Lithium Americas (LAC) saw its shares soar by 22.3% amid discussions of a potential equity stake from the Trump administration in exchange for a $2.26 billion loan to support its Thacker Pass mine project in Nevada. The company is engaged in a joint venture with General Motors in this venture.
