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S&P 500 closes lower, gives up earlier gains as volatility continues

Shares whipped in volatile trading on Thursday as investors considered an update from the Federal Reserve, the latest GDP report and corporate earnings.

The Dow Jones Industrial Average closed slightly higher at 34,160.78. The blue-chip average rose more than 600 points at its heights. The S&P 500 ticked down 0.5% to 4,326.51, and the Nasdaq Composite fell 1.4% to 13,352.78. Both indices traded in positive territory earlier in the session.

Equities are coming after three roller coaster sessions in a row, with the indices seeing big fluctuations every day this week. Despite wild intraday movements, the Dow index has fallen only 0.3% on the week, while the S&P 500 has fallen by 1.6% and the Nasdaq is 3% lower.

The Federal Open Market Committee this week strongly indicated that the first rate hike since the end of 2018 could come as early as March. Fed Chairman Jerome Powell rattled markets on Wednesday, saying the central bank has “quite a bit of room” to raise interest rates before they negatively impact employment.

“Yesterday’s FOMC decision and Powell’s press were both positive and negative for the markets, but in the end it most reinforced what we know: the Fed is serious about raising interest rates, it will continue to … keep markets volatile,” Tom Essaye, founder of Sevens Report, said in a note.

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Investors on Thursday digested a series of financial readings and earnings reports.

Fourth-quarter gross domestic product rose 6.9% year-on-year, the Department of Commerce reported Thursday. Economists surveyed by the Dow Jones expected the economy to grow at a 5.5% annual rate over the last three months of 2021.

“The Q4 GDP report was a positive surprise in a series of recently subversive economic data points,” said Mike Reynolds, vice president of investment strategy at Glenmede, in a note.

On the earnings front, Intel and Tesla released strong quarterly figures. However, their shares fell by 7% and 11.6% respectively.

Netflix jumped 7.5% Thursday after the news that Pershing’s Bill Ackman bought 3.1 million shares.

The three major averages are solid in negative territory this month, with the Nasdaq down more than 17% from its high level within the day.

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