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Stock Market Live: Caterpillar, Merck Boost Dow; Ford Stock Surges, GDP Slumps

Another set of solid Q3 earnings has stocks on the move Thursday as investors look cautiously to signs of slowing GDP growth heading into the final months of the year.

U.S. stocks powered higher Thursday, while short-term Treasury bond yields continued their recent ascent, as investors balance a healthy corporate earnings seasons against the prospect of tighter central bank policies and cooling global growth.

Apple  (AAPL) - Get Apple Inc. (AAPL) Report and Amazon  (AMZN) - Get Amazon.com, Inc. Report will highlight today's earnings slate, although both tech giants will report September updates after the close of trading, as investors will first focus on a softer-than-expected initial estimate of third quarter GDP growth. 

U.S. GDP slowed to its weakest pace in more than a year over the three months ending in September, Commerce Department data indicated Thursday, as it estimated a 2% annualized third quarter growth rate - a sharp decline from the 6.7% pace in the previous period.

The U.S. economy's post-pandemic recovery was likely hampered by cooling consumption in the face of a surge in Delta-variant infections and the fading impact of government stimulus and extended jobless benefits.

"Our third quarter forecast implies that GDP is still some 2.25% smaller than would have been the case if the pre-COVID trend had continued," said Ian Shepherdson of Pantheon Macroeconomics. "The gap should narrow in the fourth quarter and then close in the first quarter of next year, if we're right about growth rebounding strongly post-Delta."

The weaker reading is already being reflected in recent moves in U.S. Treasury bond yields, where the difference between 2-year notes and 10-year notes is just 98 basis points, suggesting traders are concerned for near-term rates hikes snuffing out longer-term growth prospects.

The Bank of Canada's signal of an early 2022 rate hike triggered more of that concern yesterday, putting today's European Central Bank meeting in Frankfurt in sharp focus as well.

On Wall Street, the Dow Jones Industrial Average gained 175 points in the opening hour of trading following stronger-than-expected earnings from Caterpillar  (CAT) - Get Caterpillar Inc. Report and Merck  (MRK) - Get Merck & Co., Inc. (MRK) Report, while the S&P 500 added 28 points.

The tech-focused Nasdaq Composite booked a 100 point advance ahead of the after-the-bell updates from Apple and Amazon.

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Merck shares jumped 3.8% to $84.67 each after the drugmaker posted stronger-than-expected third quarter earnings, and boosted its full-year profit guidance, as it looks for FDA approval for its developing COVID pill molnupiravir.

Caterpillar shares, meanwhile, raced 3% higher to $202.00 each as a rebound in construction equipment demand, as well as surging commodity prices, helped boost the industrial group's third quarter bottom line.

Ford  (F) - Get Ford Motor Company Report shares surged to a seven-year high after last night's third quarter earnings blowout, and could open at levels last seen for the second-largest U.S. carmaker in more than a decade. The stock was last seen 11.2$ higher at $17.21 each. 

Apple will publish fourth quarter earnings after the close of trading Thursday as investors look for any impact from the global chip shortage on iPhone sales for the world's most-valuable tech company.

Apple is expected to say sales rose 31% from last year to $84.8 billion, thanks in part to surging smartphone demand and a recovery in China. Apple's expected bottom line of $1.24 per share is also firmly higher than last year's pandemic-hit tally, although investors will likely focus on the group's holiday-quarter forecasts following the September launch of the iPhone 13 and reports of production cuts.

Amazon shares bumped higher, too, ahead of the online retail giant's third quarter earnings report after the close that is expected to show solid gains in overall sales while navigating labor and supply chain challenges.

Analysts expect Amazon to post a bottom line of $8.92 per share on total revenues of $111.6 billion for the three months ending in September. Amazon has said it sees operating income of between $3.5 billion to $6 billion on revenues in the range of $106 billion to $112 billion, compared to the Refinitiv forecast of $118.9 billion.

In other markets, global oil prices eased for the third consecutive session Thursday, falling to the lowest levels in two weeks, as Iran signaled it will return to talks aimed as slowing the development of its nuclear program and the U.S. Energy Department said domestic crude stockpiles rose by a much larger-than-expected 4.3 million barrels last week.

WTI futures contracts for December delivery were marked $1.22 lower on the session at $81.44 per barrel while Brent contracts for the same month fell $1.24 to $83.38 per barrel.

In Europe, a solid slate of bluechip earnings, as well as a move higher for U.S. equity futures, lifted the Stoxx 600 to a modest 0.12% gain, although sentiment was dented by a weaker-than-expected third quarter update from Volkswagen AG, which included a warning on cost cuts linked to semiconductor supply disruptions.