S&P500: Stock market forecast softens today after GDP strength sparks Fed hold expectations

Stocks Slip as Surging GDP Report tempers expectations for Fed easing

U.S. equities edged lower on Tuesday after a delayed GDP release pointed to stronger economic momentum than traders had projected for the third quarter.

The Dow Jones Industrial Average slipped 0.1%, while the S&P 500 and Nasdaq Composite hovered near the flatline as market participants reassessed the likelihood of early-2026 rate cuts.

The revised 4.3% GDP print, well above the 3.2% Dow Jones estimate, reinforced expectations that the Federal Reserve may keep policy restrictive for longer.

The report, postponed from an Oct. 30 release because of the extended government shutdown, led futures traders to increase bets that the Fed will hold rates steady at both the January and March meetings. The recalibration weighed slightly on risk appetite, though the broader market retained a generally constructive tone following Monday’s strong session.

Technically, bullish traders are trying to build on yesterday’s rally through a key pivot at 6381.60 after last week’s breakout over the 50-day moving average at 6778.73.

Today’s early strength has put the two tops at 6903.46 and 6920.34 back on the radar.

Is broad market strength still intact?

The S&P 500 is coming off its third straight gain, supported by a 1.5% advance in Nvidia and solid moves in Micron and Oracle.

Ten of eleven sectors closed higher, with materials and financials at the front of the pack. Newmont and Freeport-McMoRan rose 3% as gold and silver futures set fresh records, giving traders another signal of persistent demand for metals.

The Dow gained 228 points in the prior session and the Nasdaq added 0.5%, extending the market’s late-year recovery.

Are investors rotating into cyclical groups?

CIBC Capital Markets strategist Chris Harvey noted that financials have been driving recent gains as investors increase exposure to cyclical areas. He contrasted current positioning to the late-1990s internet boom, arguing that today’s valuations appear more grounded.

JPMorgan Chase has outperformed many tech names across three- and five-year periods, a trend Harvey sees as evidence of healthier market structure.

How are sectors performing following the GDP revision?

Sector performance was mixed in early Tuesday trading. Communication services led with a 0.83% gain, followed by energy and consumer discretionary. Financials also ticked higher. Industrials, materials, consumer staples, and real estate posted modest declines. Technology was slightly positive, though strength was concentrated in a few large names.

Which individual stocks are moving on corporate developments?

ZIM Integrated Shipping Services jumped 10% after confirming multiple acquisition proposals. Novo Nordisk climbed 7% premarket after the FDA approved its oral GLP-1 pill, expanding its obesity treatment lineup.

Huntington Ingalls advanced 5% on reports that President Trump will meet defense executives to press for higher weapons and R&D spending. Reddit rose 1% after Needham named it a top pick for 2026, while Johnson & Johnson slipped 0.9% following another adverse ruling tied to talc-based products.

Short-term outlook: With GDP running hotter than expected and rate-cut pricing adjusting accordingly, equity sentiment leans mildly cautious. Traders will likely focus on incoming inflation prints and Fed communications for clarity on whether policy relief can materialize in early 2026.

More Information in our Economic Calendar.