U.S. GDP data is less than expected, why is the stock market still rising across the board?

On October 28, the just-announced third-quarter GDP of the United States fell short of expectations, growing by 2.0% in the third quarter, with the Delta variant and supply problems curbing growth. That pace has slowed markedly from the strong growth seen earlier this year. But the three major U.S. stock indexes opened higher, boosted by strong earnings from major companies. Data show that nearly 40% of companies in the S&P 500 have reported earnings, and more than 80% of them have exceeded Wall Street expectations. Third-quarter profits for S&P 500 companies are expected to rise about 37.6%.

The better-than-expected results eased concerns about supply chain difficulties would hit profits, pushing stocks higher in October. Earnings season continues, with Amazon and Apple set to report after the close. Earnings growth has been very strong, said Kiran Ganesh, multi-asset strategist at UBS Global Wealth Management.

Aa more positive news for the economy is initial jobless claims came in at 281,000 last week. Economists polled by the market expected 289,000 people to apply for unemployment benefits. Shoppers are likely to open their wallets this holiday season, thanks to rising wages and savings from several rounds of federal stimulus. U.S. savings rose to an annualized rate of $1.7 trillion in August, up from $1.4 trillion in February 2020, according to Commerce Department data.