STOCKS RALLY AFTER STRONG GDP REPORT: Here's What You Need To Know

First, the scoreboard:

• Dow: 16,221.4 (+42.3, +0.2%)
  
• S&P 500: 1,818.5 (+8.9, +0.4%)
• Nasdaq: 4,104.7 (+46.6, +1.1%)

And now the top stories:

• The Dow and S&P 500 closed at all-time highs.
• U.S. GDP surged 4.1% in Q3, according to the Bureau of Economic Analysis' final estimate. Economists estimated the number would clock in at 3.6%. The surprise was driven personal consumption growth, which was revised to 2.0% from an earlier estimate of just 1.4%. Real final sales, which excludes inventory adjustments, was revised to 2.5% from 1.9%.
• Here's Bank of Tokyo-Mitsubishi's Chris Rupkey: "[Americans] are taking care of themselves, spending more on health care, and getting out and about, spending more on recreation, and driving around more, buying more gasoline. Is this economic growth fast enough to put America back to work? The answer is, Yes, the wheels of the economy are turning fast enough to bring down the unemployment rate further. In other words, the economy is running faster than its long run potential. The labor market improvement is sustainable, and the outlook for employment gains in 2014 is a bright one."
• Not long ago, economists were worried that anemic economic data would mean easy monetary policy for years to come. But in recent weeks, all of the major U.S. indicators have come in stronger than expected. This led to the Federal Reserve unexpectedly announcing that it would be tapering some of its stimulus. "Starting to think this week's $10 billion taper was too little," said Deutsche Bank's Joe LaVorgna today. "Fed may have to be more aggressive next month."
• Furthermore, this data also has some people doubting the Fed's verbal commitment to keep rates low. "I believe the market will struggle with the credibility of forward guidance in the context of an improving economy," said Bank of America Merrill Lynch's Priya Misra. "We have never dealt with forward guidance without QE, so QE tapering should weaken the market's perception of forward guidance."
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