The stock market moved higher on Thursday despite US economic growth contracting for the second quarter in a row, a significant recession indicator which spooked markets—though most experts argue that the economy is yet to fall into a true recession thanks to solid job growth and consumer spending.
Stocks moved slightly higher despite the gloomy economic outlook: The Dow Jones Industrial Average rose 1%, over 300 points, while the S&P 500 gained 1.2% and the tech-heavy Nasdaq Composite 1.1%.
New data from the Bureau of Economic Analysis indicated that the US economy has fallen into a technical recession after GDP shrank at an annual rate of 0.9% in the second quarter (well below the 0.3% increase), following a 1.6% GDP decline in the first quarter.
While the latest data adds no doubt to ongoing fears of an economic downturn in markets—especially as the Federal Reserve continues to aggressively hike interest rates, many experts still argue that the economy is not yet in a full recession, citing the strong labor market and solid consumer spending.
“With solid job growth in the first half of the year, the economy didn’t look like it was in a recession,” says Comerica Bank chief economist Bill Adams, though he warns that the outlook for the rest of the year and into 2023 is a lot “dicier.”
Investors continued to assess the latest batch of second-quarter earnings on Thursday, with shares of Facebook-parent Meta falling nearly 6% after management warned of “weak advertising demand” amid the challenging economic environment.
Shares of Comcast fell nearly 10% after the company failed to add subscribers for the first time ever, while manufacturer Stanley Black & Decker saw its stock plunge 15% after management slashed its profit outlook.