U.S. stocks rose on Tuesday and the S&P 500 was on track for a closing record after a flurry of economic data that included a reading of economic growth pushed bond yields higher and boosted growth names.

The Commerce Department said gross domestic product increased at a 4.3% annualized rate in the third quarter, the fastest pace since the third quarter of 2023 and well above the 3.3% estimate of economists polled by Reuters, fueled by robust consumer spending.

While the data was delayed due to the 43-day government shutdown and many analysts expected the fourth quarter would show a slower pace of economic growth, markets are now pricing in a smaller chance of a January rate cut from the Federal Reserve, according to CME’s FedWatch Tool, and shorter-dated bond yields rose.

“The bond market didn’t like this news,” said  Stephen Massocca, senior vice president at Wedbush Securities in San Francisco.

“It seems to me that when we lose this battle, growth does well, and growth’s doing well today… but if you’re a food company, or you’re a chemical company, or you’re an oil and gas company, or even if you’re like a private credit company, that’s bad news. Unless interest rates go down, it’s bad.”

Major Markets Gain

The Dow Jones Industrial Average rose 117.13 points, or 0.24%, to 48,479.81, the S&P 500 gained 28.17 points, or 0.41%, to 6,906.66 and the Nasdaq Composite gained 110.01 points, or 0.47%, to 23,538.84.

The S&P 500 growth index gained 0.7% while the value index was unchanged.

AI-related names continued their recent gains, rebounding from last week’s selloff that was triggered by concerns about inflated valuations and worries that high capital spending by AI companies would pressure their profits.

Nvidia rose 2.6%, while Amazon.com, Alphabet and Broadcom rose more than 1% each.

Other economic data painted a less rosy image of the economy as U.S. consumer confidence weakened in December amid deepening anxiety over jobs and income, while factory production was unchanged in November after declining in October.

All three main indexes were poised for a third straight yearly gain. The S&P 500 and the Dow were also on track to rise for an eighth consecutive month.

Recent gains in U.S. stocks have spurred hopes of a “Santa Claus rally”, a seasonal phenomenon where the S&P 500 posts gains in the last five trading days of the year and the first two in January, according to Stock Trader’s Almanac.

This year, that period starts on Wednesday and runs through January 5.

Trading volumes were light and likely to thin out further as the holiday approaches. U.S. stock markets will close at 1 p.m. ET (1800 GMT) on Wednesday and remain shut on Thursday for Christmas.

ServiceNow shed 1.9% after the enterprise software maker agreed to buy cybersecurity startup Armis for $7.75 billion in cash.

U.S. military shipbuilder Huntington Ingalls edged up 0.7% after President Donald Trump announced plans for a new “Trump class” of battleships, which he said would be larger, faster and “100 times more powerful” than any previously built.

Miner Freeport-McMoRan rose 2.6% after hitting a 15-month high of $52.29 as copper prices touched a record high and Wells Fargo raised its price target on the stock.

Declining issues outnumbered advancers by a 1.03-to-1 ratio on the NYSE, and a 1.61-to-1 ratio on the Nasdaq.

The S&P 500 posted 35 new 52-week highs and five new lows, while the Nasdaq Composite recorded 62 new highs and 146 new lows.

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(Reporting by Chuck Mikolajczak; additional reporting by Sruthi Shankar and Shashwat Chauhan in Bengaluru; Editing by Shilpi Majumdar, Shinjini Ganguli and David Gregorio)