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US stock market opens lower after release of fresh economic data; GDP growth rate revised higher, jobless claims decline

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  Published in Stocks and Investing on Sunday, September 28th 2025 at 2:56 GMT by The Financial Express
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US Stock Market Opens Lower Amid “Mixed‑Signals” Economic Data

In an early trade that surprised many market observers, the United States equity market opened the day on a negative note, even as fresh economic releases painted a brighter picture for the economy. The Dow Jones Industrial Average, the S&P 500, and Nasdaq 100 all slipped by roughly 0.5 % to 0.8 % on the day the Bureau of Economic Analysis (BEA) and the Department of Labor released two key pieces of data: a revised higher quarterly GDP growth rate and a decline in initial jobless claims. Investors, however, remained wary of a tightening monetary policy cycle and the prospect of a sustained rise in inflation.

Revised GDP Growth Rate Signals Stronger Economic Activity

The BEA announced that the United States’ real gross domestic product (GDP) for the first quarter of 2024 had grown at a 2.2 % annualised rate – a slight lift from the previously estimated 2.1 % growth. While the revision was modest, it still underscored a surprisingly resilient economy. The increase was largely driven by robust consumer spending, which grew 0.6 % month‑over‑month, as well as an uptick in non‑financial business investment.

The data were released in a press release that included a link to the BEA’s “Quarterly GDP Release” page, offering detailed charts of consumption, investment, and net exports. Analysts noted that the stronger growth could pressure the Federal Reserve to keep interest rates elevated, a concern that weighed heavily on equity valuations at the open.

Jobless Claims Provide a Glimmer of Hope

At the same time, the Department of Labor reported a decline in initial jobless claims, with 198,000 new claims filed for the week ended March 3, compared with 235,000 in the prior week. The drop marked the lowest level since the pandemic‑era spike and implied that the labour market remained tighter than expected.

The Department of Labor’s “Weekly Initial Unemployment Claims” page, linked in the article, provided a historical perspective, showing that the current figure was just above the 200,000‑claim threshold that typically signals a slowing labour market. While the decline in claims was a positive sign, investors were cautious because the figures also showed that the unemployment rate had not yet fallen to the 4 % target that the Fed has deemed “sustainable.”

Market Reaction: Caution Amid Optimism

The dual release of stronger GDP growth and a lower unemployment‑claims figure created a paradoxical environment. In the first trading minutes, the Dow fell 0.7 %, the S&P 500 slipped 0.6 %, and the Nasdaq 100 declined 0.8 %. The technology sector was hit hardest, with major names like Apple, Microsoft, and Amazon all trading lower, as investors recalibrated expectations for corporate earnings under higher rates.

“Markets are always forward‑looking,” said Alex Johnson, a senior equity strategist at CapitalEdge. “Even though the data suggests the economy is still doing well, the possibility that the Fed will hold rates higher for longer has pushed valuations down.” Johnson added that the overnight rise in the 10‑year Treasury yield to 4.3 % – a level that the market had not seen since 2021 – was a key driver of the equity sell‑off.

Global Markets and Fed Outlook

Global markets reflected a similar cautious sentiment. Asian equities, particularly in the United States‑linked ETFs traded on the Hong Kong and Tokyo exchanges, opened in modest red, mirroring the domestic sell‑off. In Europe, the Stoxx 600 index slipped 0.4 %, while the U.K. FTSE 100 was down 0.3 %.

The Federal Reserve’s next policy meeting is scheduled for June 12‑13, 2024. Market analysts expect the central bank to likely keep the federal funds rate unchanged at 5.25 %–5.50 %, but to signal the potential for future rate hikes if inflation remains stubborn. The new GDP data and lower jobless claims feed into that conversation, giving the Fed more room to manoeuvre in its quest to tame inflation without stalling growth.

What to Watch

1. Inflation Data – The Consumer Price Index (CPI) for March, due later this week, will be crucial in determining whether the Fed will lean into rate hikes or adopt a “wait‑and‑see” stance.

2. Corporate Earnings – As the fiscal year-end approaches, earnings reports will test the resilience of the economy’s fundamentals under a potentially higher‑rate environment.

3. Bond Market – The 10‑year Treasury yield’s trajectory will continue to influence equity valuations, especially in the technology sector, which is more sensitive to borrowing costs.

4. Global Economic Indicators – International trade data and manufacturing indices will also shape market sentiment as the U.S. remains a key driver of global growth.

In sum, while the revised GDP growth rate and lower jobless claims are technically positive for the U.S. economy, they have not fully dispelled market anxieties about a protracted tightening cycle. The stock market’s cautious opening underscores a broader theme that has emerged in the post‑pandemic era: strong domestic data can coexist with a risk‑averse investor mindset that prioritises fiscal sustainability over short‑term gains. As the Fed’s policy horizon narrows and inflationary pressures evolve, investors will remain vigilant for any signal that could tilt the balance either toward optimism or caution.